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The alcohol industry has asked for a reduction in ‘harsh’ duty rates. The Wine and Spirit Trade Association (WSTA) says last year’s increases had a ‘quick and negative effect’ on UK businesses.
They have asked the Chancellor to help recover nearly £600 million in losses to the Treasury, arguing that a duty cut would stop further price rises that fuel inflation, support business and increase revenue to the Exchequer.
WSTA said the latest HMRC data published on Wednesday suggested the Treasury lost £436 million in excise duty receipts for wine and spirits between September and January compared with the same period a year earlier. This increased to £600 million once losses from beer and cider were added, WSTA claimed.
Alcohol duty hikes in August last year were the largest in almost 50 years, adding 20 percent to excise duty on more than 85 percent of all wines on the UK market and more than 10 percent to duty paid on full strength spirits.
WSTA’s soon-to-be-published Market Report will reveal that in the 12 weeks to December, volume sales of spirits were down 7.1 percent on the previous year, while wine sales were down 4.1 percent.
According to ONS data, the average price of a bottle of red wine is up eight percent to £7.85 on last year, while a bottle of gin is up six percent to £17.11 and fortified wine has risen by 17 percent to £11.67.
WSTA chief executive Miles Beale commented: “Last year’s punishing duty increases have had an immediate and negative impact on the amount of wine and spirit sold in the UK.”
“Not only has this hurt British businesses, it has fuelled inflation and significantly reduced excise duty receipts to the Exchequer.”
“Recent history has shown that cutting excise duty can lead to increased sales, prevent further price rises for consumers and bring in more revenue into the Exchequer.”
“We are calling on the Chancellor to do himself, and everyone else, a huge favour by cutting alcohol duty.”
Philippa Strub, the UK chief executive of retailer Laithwaites, remarked: “It is no surprise that August’s 20% increase in wine duty has led to the Government receiving less duty revenue.”
“We, along with many other wine merchants, have seen sales volumes decrease since the duty hike as consumers react to higher prices.”
“Wine drinkers across the UK face yet higher prices from August this year if the Government increases duty at the spring Budget.”
“Worse still for consumers, UK inflation and the Exchequer, the Government currently plans to unleash the full extent of the new duty system on wine next year, a system so fiendishly complicated that even Laithwaites, a business with over 50 years of experience, will struggle to operate across our range of 2,000 wines.”
“With duty-fuelled wine inflation already running much higher than UK inflation, we call on the Chancellor to cut duty at the spring Budget and make the wine duty easement permanent.”
