This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
WSTA urges duty freeze to recover lost £1.3bn
Trade body the Wine & Spirit Trade Association (WSTA) has warned the UK government cannot afford to increase alcohol duty again, after last year’s hike caused a £1.3 billion (US$1.7bn) drop in revenue to the Exchequer.
In August 2023, the government implemented the biggest alcohol tax rise in almost 50 years, which saw a 10.1% increase for spirits and an almost 20% spike for wine.
The latest HMRC (His Majesty’s Revenue and Customs) data shows that from September 2023 to August 2024, the alcohol tax hike has caused a 10% (£1.3bn/US$1.7bn) revenue drop to the Exchequer. For comparison, this is almost the same amount as the winter fuel allowance savings.
As a result, the WSTA is urging the Labour government to introduce a two-year duty freeze to allow sales to recover.
The trade association also warned that if taxes continue to rise and sales continue to fall, VAT receipts will also be down.
“Last year’s damaging reforms to the alcohol excise duty system, including the largest single duty hike in almost 50 years, have hit businesses, consumers and the government purse,” said Miles Beale, chief executive of the WSTA. “Prices have risen, sales are down and so is duty income by over £1.3bn.
“Whilst it’s good news the chancellor has more financial headroom as HMRC’s overall receipts show a £8.9bn [US$11.8bn] windfall, this could have been boosted further – by almost £1.5 billion [US$2bn] – if the previous government had not increased alcohol duty by double digits.
“The prime minister and chancellor have been unequivocal in setting out the need to achieve economic growth and in signalling that the pressures on public expenditure mean difficult decisions will have to be taken at the budget on 30 October. For alcohol duty the decision need not be difficult. Increasing duty – which is the government’s inherited policy – will serve only to reduce income to government further at a time it can least afford it.
“Freezing duty for at least two years and avoiding imposing damaging additional costs and red tape by maintaining the wine easement, will benefit businesses and consumers by driving growth and keeping prices stable while optimising government income.
“In short, a freeze won’t cost government anything, but it will be financially beneficial to the Treasury, British business and consumers.”
Ahead of the UK’s autumn budget, the WSTA is also asking the government to confirm its commitment to ending duty stamps for spirits drinks, as agreed by the previous Conservative government, but not yet enacted.
Related news
Call to cut Ireland's alcohol tax