Ben Stephens, wine2laydown.com blog on the Budget

Yes, more duty. But red tape too? There are two concerns facing the wine industry from the Chancellor's 2009 budget report:

(1) Yet another duty increase

Duty on a bottle of wine increases by 4p, less than four months after an 11p/bottle increase was implemented. Whilst it is important to impress sensible drinking habits upon people, a 15p per bottle increase in duty in this timescale is outrageous. In the budget report, the rationale behind the increase is to ensure that the alcohol duty levels received by the government do not fall as people buy less alcohol. This shows a great level of support to the country's 700 wine merchants. Excise duties in total will account for £44bn this year and surpass 3% of GDP for the first time.

Apart from obvious price hikes to customers and subsequent lower demand, companies must review the use of bonded warehouses. Duty increases today are 2.4% higher than inflation and have increased by 10% in just four months. The rate of increase does not look like stopping, so why hold wine in bond? Pay the duty now, whilst it remains affordable.

We should also not forget that in just over eight months, VAT increases back to 17.5%. This will be chargeable on the wine and the duty. Another kick in the teeth for the UK's wine merchants.

(2) More Red Tape

The UK Wine industry must carry one of the highest burdens of red tape. Just try importing one bottle of wine into the country for re-sale and look at the amount of paper that it generates.

The part of today's budget that sends shivers down the spine is that HM Revenue and Customs will be setting out 'a comprehensive programme of work to target all forms of alcohol fraud'.

Whilst the sentiment should be applauded, can we as an industry have an input as to how this comprehensive programme is implemented and administered. The last thing we need is an increase in regulative obligation in addition to the financial burden already unleashed on the UK wine industry.

Ben Stephens
Managing Director
Wine2laydown.com

• Harpers Says...