Calls to cut ‘unfair, outdated’ UK spirits tax

21st January, 2020 by Melita Kiely

The Wine and Spirit Trade Association (WSTA) has urged the UK government to reform the nation’s “unfair, outdated and restrictive” alcohol tax, and cut wine and spirits duty by 2% in the upcoming budget.

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The WSTA is calling for the UK government to cut alcohol duty by 2% in the upcoming budget

The WSTA sent its budget submission to the Treasury today (21 January). The UK budget is scheduled to take place on 11 March.

It noted that the duty freeze delivered in the last budget for beer and spirits resulted in a revenue increase for the Exchequer of 2.4% for beer and 1.7% for spirits.

In contrast, a rise in duty for wine in 2018 led to a 2.1% drop in revenue to the Exchequer to £2.4 billion (US$3.1bn) over the last six months, down from just over £2.5bn (US$3.3bn).

The figures, from the government’s recent Alcohol Duty Bulletin, also forecast that the Treasury would lose £93m (US$121m) in 2019 compared to 2018 if the same rate of decline continues.

According to the WSTA, the cost of an average priced bottle of spirits consists of 73% tax, meaning UK drinkers pay £8.05 (US$10.50) in tax for every bottle of spirit they buy that has an ABV of 40%.

Miles Beale, chief executive officer of the WSTA, said: “Duty rises are bad for consumers, bad for business and bad for the Exchequer, as the government’s own figures clearly show.

“After wine was singled out for a duty rise, wine revenues have fallen on the previous year in line with a slump in wine sales.

“We recognise the fact that alcohol duty is an important revenue stream for government to fund public services, which is precisely why we are calling for a 2% duty cut on wine and spirits. A cut will not only boost Treasury coffers but also bring a boost post-Brexit to British businesses and consumers, whereas another rise will have a negative impact on all three.

“If government chooses to increase what are already some of the world’s highest alcohol tax rates, it will not only push up prices for people who voted them in but also hit hard an industry that prides itself in flying the flag for the brand Britain.

“We agree it’s time for government to change the UK’s unfair, out-dated and restricted wine and spirit duty regime. However, the chancellor should pre-empt reform with a duty cut.”

The WSTA is calling on members and the public to lobby MPs and highlight the UK’s “grossly unfair” alcohol taxation policy. Spirits consumers and businesses pay £3.8bn (US$4.9bn) in duty each year.

It also noted that the UK alcohol sector is one of the “most heavily taxed in Europe”, with the fourth highest duty rate for spirits across the European Union (EU), and the third highest for wine.

UK drinkers pay 68% of all wine duties collected by all 28 EU member states and 27% of all spirits duties – while accounting for 11% of the total EU population.

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