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Industry calls for beers, wines and spirits duty cuts - but who will get what?

Published:  07 February, 2017

Voices across the trade are speaking out this week against "crippling" levels of alcohol duty in the UK - where consumers pay a quarter of all EU spirits tax.

Voices across the trade are speaking out this week against "crippling" levels of alcohol duty in the UK - where consumers pay a quarter of all EU spirits tax.

The Scotch Whisky Association is calling on the chancellor ahead of the upcoming budget on March 8, to commit to a 2% cut, highlighting the fact that the UK pays 26% of the spirits duty collected in the EU despite having only around 11% of its population.

The WSTA is also calling for a 2% cut, but for both wines and spirits.

The trade association has criticised the decision to only freeze beer duty at last year's budget, warning that beer tax cuts is only a "job half-done" due to changing nature of pubs and consumer drinking habits.

Beer is at the top of the agenda for consumer group CAMRA however.

The group, which campaigns for the longevity of ales in the UK's pubs, is asking the Treasury to reduce beer duty by a further 1p.

Beer duty campaigners have had some success in recent years with three consecutive penny cuts to duty and a subsequent freeze, but the UK is still paying among the highest rate of beer duty in Europe at 52.2p on the pint.

However, Miles Beale, chief executive of the WSTA, said focusing on beer is not enough to protect pubs.

"While the government has focused on beer cuts previously to support British pubs, the reality is that this is only a job half done."

"While we are seeing 23 pubs closing a week we cannot stress how crucial it is for government to recognise how important the UK wine and spirit sector is to jobs, communities and the economy,'" he added.

As we have seen in the past, beer has been looked on most favourably by the government as the category which has historically been the bread and butter of the nation's pubs.

However, times are changing, and as the domestic wine market and the Scotch and gin industries continue to grow, this has been reflected in the budget on an ad hoc basis.

Duty on both wine and spirits were frozen in the 2015 budget - leading to massive revenue gains for the Treasury, the WSTA argues.

However, in March 2016, former chancellor George Osborne announced a freeze on spirits duty, but not on wine, much to the chagrin of wine retailers and also to the growing number of producers.

One thing all are agreed on is that a cut in duty will benefit the industry overall and could boost the Treasury's coffers by up to £368m.

"With higher inflation, the impact of the devaluation of the pound and the potential for duty increases, the pubs industry faces a potential triple whammy that will be devastating for the trade in 2017," Beale said.

"Our new economic report shows that a 2% cut would boost the wine and spirits industry economic contribution by £2.9bn and also boost Treasury revenues by £368m."

The WSTA recently issued a call to arms for the trade to contact their local MP about the importance of making sure that wine gets a favourable deal in next months' budget.

They are currently helping businesses to identity their local representatives and providing data to support the effort.