Lifting alcohol duty freeze would be ‘regressive’

The spirits industry has said unfreezing alcohol duty in the UK would be “counter-productive” and “regressive”, as reports suggest the government could increase taxes to fund the NHS.

Unfreezing alcohol duty in the UK would be “counter-productive”, says WSTA

The comments come as pressure mounts on UK prime minister Theresa May to boost public spending while cutting the deficit – and to find £20 billion (US$26.4bn) promised to the NHS (National Health Service) by 2023.

A Treasury spokesperson said: “As the prime minister and chancellor have made clear, tax payers will have to contribute a bit more, in a fair and balanced way, to support the NHS we all use.

“We will listen to views about how we do this and will set out plans at future fiscal events.”

In November last year, UK chancellor Philip Hammond announced a freeze on wine, spirits and beer duties in the autumn Budget.

Last month, the WSTA shared data from Her Majesty’s Revenue & Customs (HMRC), which showed the freeze on duty for wine, beers and spirits in the UK generated an extra £86m in four months from December 2017 to April 2018.

The Wine and Spirit Trade Association (WSTA) said raising alcohol duty would be “counter-productive” and urged the government to “back the UK’s wine and spirit industry”.

Miles Beale, chief executive of the WSTA, said: “There is no ‘freeze’ on alcohol duty. The government’s policy is to increase levels of duty in line with RPI inflation, which currently sits at around 3.5%.

“The WSTA successfully campaigned last November to have the chancellor waive this rise, and duty levels did not increase last Budget – however, this followed a rise of over 3% in March 2017.

“Recent WSTA analysis has shown that by freezing duty last time out, Philip Hammond actually raised revenue for the Treasury.

“We believe raising the rate of alcohol duty is counter-productive – and will continue our calls for government to back the UK’s wine and spirit industry and help ease pressure on cash strapped consumers.”

The Scotch Whisky Association (SWA) has also commented on the matter, arguing existing duties on Scotch put the category at a “competitive disadvantage”.

The trade body described any decision to increase taxes on Scotch whisky as “regressive”, reiterating the additional funding given to the Treasury since the duty freeze last year.

Graeme Littlejohn, deputy director for the SWA, said: “The chancellor’s focus should be on supporting Scotch whisky in our home market to maximise government revenue as well as boosting investment and employment in this vital industry.”