More than 30 EU spirits tax hikes hit industry

A total of 32 tax increases in 19 countries over the past two years has had “multiple, interconnected, negative effects” on the European spirits industry, a trade body has argued as it strengthens its call for lower duties.

Spirits Europe has strengthened its call for a spirits tax break in a new publication

In its new publication, Tax – a brake on European spirits growth, trade association Spirits Europe said that tax hikes do not always generate the revenues expected, but instead impact distillers and consumers and allow the black market to flourish.

Paul Skehan, director general of Spirits Europe, said data suggests a “correlation between the size of the illegal market” and the level of tax burden in relation with disposable income.

Spirits Europe said 40% of the spirits market in Greece is illegal following a 125% tax rise between 2008 and 2014.

“Squeezed wallets and inflated prices offer an open invitation to criminals selling counterfeit or illicit alcohol products.  A perfect storm,“ Skehan added.

“It is time for exchequers in a number of markets to consider lowering the tax on spirits as recently done in the UK to generate jobs and growth through production and distribution.”

In the 2015 Budget Statement, revealed in March, the UK’s Chancellor George Osborne cut spirits duty by 2% following a high profile campaign launched by the Wine and Spirit Trade Association (WSTA), Scotch Whisky Association (SWA) and the Taxpayers’ Alliance.

Spirits Europe’s new publication also states the need for “fair and equitable tax treatment” between spirits, beer and wine. It claims an average 70% of the price of a bottle of spirits bought in Europe is tax, while spirits are consumed the least, with 43% of the market belonging to beer and 32% to wine.

Furthermore, the organisation claims that high taxes do not reduce alcohol-related harm because they “cannot distinguish between abusive and moderate drinkers”.

Last year, a group of EU ambassadors, MEPs and producers agreed that increased taxation would not tackle counterfeiting and health issues.