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Minister backs call for lower duty tax band for reduced alcohol wines

Published:  12 December, 2014

The UK's public health minister has expressed "frustration" with a lack of flexibility around introducing a lower tax band for lower end wines, but the WSTA warns such a step would discriminate against wine from warmer climes.

Public health minister Jane Ellison said, in evidence to the House of Lords EU Home Affairs, Health and Education sub-committee on a new EU Alcohol strategy, that there were some areas of "frustration", with the current strategy, and that the UK government would like to have the "flexibility" to go further on certain issues.

She said the low alcohol market was an area of "particular interest", and one which she would like to see market forces driving. Greater flexibility around taxation, and particularly, duty levels on wine, are required, she said.

"I've had a lot of discussions trough the Responsibility Deal with manufacturers and supermarkets who have invested a lot of time and effort in lower alcohol products," she said.

The level of alcohol in wine has "crept up and up and up" in the past 30 years, she said, without anyone really noticing it was happening.

"This isn't going to happen overnight ... but I have said it's one of my priorities," Ellison said.

She has already written to the Treasury and spoken in debates on the issue, and says she want to "make sure it is very firmly on the agenda" as one of the UK's 'asks' within the new EU strategy to be able to have more flexibility around taxation bands on wine.

Currently EU rules stipulate that wines - although they can't be referred to as wines, but rather 'wine-based products' - under 5.5% avail of a lower rate of duty. Other wines, between 5.5% abv and 15%, are classed together, while above 15% they are classified as fortified.  Different rates of duty apply to sparkling wine.

There have previously been calls for a new lower tax band from 5.5% abv to somewhere between 9% and 11% to encourage producers to innovate more at the lower end of the spectrum, and therefore reduce alcohol consumption.

Low-alcohol debate

However, some say such a band would unfairly discriminate against producers from hotter climes, such as Australia and South America, which naturally produce wines that are higher in alcohol than cooler climate producers.

One source told uk there has been a "lot of misinformation" by the alcohol health lobby, around how the average abv in wine has increased from 10 to 14% in the past 10 years. The source described this claim as "absolute nonsense", saying it has increased by around 1% in that period, as New World wines have grown in popularity.

Miles Beale, chief executive of the WSTA, said: "There is a frustration with being unable to market alcoholic drinks to consumers based on low or lower alcoholic strength. Ministers have agreed to look at this, which we welcome.  

"Taxes on alcoholic products in the UK are already very high by any absolute or comparative measure. Under EU law wine is considered an agricultural product with its abv determined by the climate, and so excise duty is applied at the same rate for all wines between 5.5% and 15% abv. The UK's wine market is probably the most diverse in the world and offers wines from all parts of the world, with every characteristic and for every consumer. Introducing differential duty rates for wine between 5.5% and 15% abv would discriminate against wine from warmer climates where abv typically tends to be higher."

A Portman Group spokesman said:  "Developing the lower alcohol market is a great way to give consumers a wider choice of products when they want to enjoy a drink but consume a bit less alcohol - it's a win for responsible drinking and a win for economic growth. We would like to see governments in Westminster and Brussels, continue to support and incentivise this kind of voluntary industry innovation."