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Page last updated at 20:50 GMT, Wednesday, 7 April 2010 21:50 UK

Ministers drop plans for 10% increase in cider tax

Man drinks homemade cider
The cider rise is particularly unpopular in the west of England

The government has dropped plans for a 10% tax rise on cider following fierce opposition to the move.

Ministers were forced to rescind the increase, announced in the Budget, as part of efforts to get laws passed after the general election was called.

With Parliament dissolving on 12 April, a broadband tax and an electoral reform referendum have also been dropped.

The Tories and Lib Dems welcomed the cider move but Labour say it will be re-introduced if they are re-elected.

Ministers have already confirmed that plans for a referendum on the voting system and to phase out the remaining hereditary peers from the House of Lords have been dropped from a bill on constitutional reform.

However, Labour are set to include plans for a referendum on electoral reform and an elected House of Lords in their manifesto.

In the rush to secure legislation before Parliament breaks up, known as the "wash-up period", ministers historically have to make concessions in order to ensure that bills are approved.

Legislation to drive down fees charged by libel lawyers was dropped after a rebellion by Labour MPs concerned that it would deter lawyers from taking cases on.

Additionally, a 50p-a-month broadband tax, which would have been applied to all households with a landline telephone, has been shelved.

Outstanding bills

The 10% above inflation tax rise for cider came into force at the end of last month after being announced by Chancellor Alistair Darling.

Mr Darling said it was justified because cider had historically been treated more favourably than other alcohol categories but the opposition parties said the move was punitive, at a time when British firms were struggling to emerge from the recession.

The Conservatives said the tax rise would now expire on 30 June, after which cider would be subject to the standard 2% increase announced in the Budget for beers and spirits.

The Conservatives and Lib Dems are fighting to win seats in the west of England, the historic home of the cider industry.

The cider tax rise was included in the government's Finance Bill, which was eventually passed by the House of Commons on Wednesday.

The Conservatives said they also forced the government to backtrack on the plans to levy a charge on landline phone bills - due to come into force in October - to pay for the universal roll-out of broadband.

They declared the reversal of the two tax rises - as well as another on the taxation of holiday rental homes - as a "major victory for businesses and consumers across Britain".

Labour has said all the tax measures will be re-introduced should it be re-elected.

The bill still has to be passed by the House of Lords but ministers have already said a number of other measures - including plans for a new body to support financial regulation and for consumers to be able to join together to make it easier to sue financial firms - have been dropped.

  Measure Bill Action
Tax rise of 10% on cider Finance Bill To be dropped. Introduced 29 March 2010. Ends 30 June
Broadband tax of 50p per month Finance Bill Dropped. Was due Oct 2010.
End tax relief on holiday homes Finance Bill Dropped
Referenda on electoral reform and elected House of Lords Constitutional Reform and Governance Bill Dropped. Was due by Oct 2011.
Cut fees for "no-win no-fee" lawyers from 100% to 10% Conditional Fee Agreements (Amendment) Order Dropped

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