ONE of the region's leading brewers has joined calls for the Government to overhaul the duty system, which uses the beer and pub trade as an "unpaid tax collector for the Treasury."

The Black Sheep Brewery, based in Masham, North Yorkshire revealed in its annual accounts that it paid almost £7.5m in alcohol duty last year, a staggering 41 per cent of its total turnover.

The UK beer industry bears the second highest tax burden in Europe with only Finland paying a higher level. German brewers pay ten times less tax than their UK counterparts.

Paul Theakston, the Black Sheep founder, has grown frustrated that the industry has been seen as a "soft target" by successive Chancellors of the Exchequer who siphon-off billions of pounds every year to boost Government coffers.

Mr Theakston, part of the Theakstons brewing dynasty, which has produced beer in the region for six generations, believes that independent brewers and their customers are bearing an unfair tax burden which is hitting profits and forcing up prices at the bar.

"If they carry on in this vein the Government risk killing the goose that lays the golden egg," warned Mr Theakston, who passed day to day control of the business to his eldest son, Rob in January.

"When you factor in VAT, income tax etc. we are handing roughly half of our turnover back to the Chancellor. What kind of incentive is that for a business?"

"I worry about the impact on the customer, who already has to manage their spending very cautiously and can ill afford rising beer prices at the bar."

Mr Theakston stressed that, despite the tough market conditions, Black Sheep continued to perform strongly, recording a pre-tax profit of £464,878 for the year to March 31. However, he hoped George Osborne would give regional producers a tax break similar to those enjoyed by microbrewers. The progressive beer duty introduced in 2002 means that brewers producing up to 5,000 hectolitres a year pay only half the standard rate of duty. The discount gradually reduces until the 30,000 hectolitres threshold after which the full rate is payable. Lee Le Clercq, North of England secretary of the British Beer & Pub Association, shared Mr Theakstons view that a shake-up of the system is needed to bring fairness back to the market.

"The progressive beer duty is the reason why you walk into many pubs and see all sorts of weird and wonderful names on the pumps," said Mr Le Clerq. "We welcome the choice that brings to the customer, but it is unfair on our regional brewers: Black Sheep, Timothy Taylor and Theakston, who are having a very hard time. We want to see the threshold extended to 200,000 hectolitres, which is more in line with European levels. With supermarkets selling beer at a loss to attract customers the Government needs to take action to enable our industry to compete."