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WSTA calls on Chancellor to support wine and spirit SMEs

Published:  18 February, 2020

Several UK wine and spirit SMEs have united to urge the new Chancellor, Rishi Sunak MP, to cut wine and spirit duty by 2% to help boost British business.

In a letter signed by 16 WSTA members typical of the sector’s SMEs, which make up the majority of the UK’s wine and spirit businesses, they highlight how their businesses would face significant pressures if government carries through the increases it plans and raises duty by 2.2%.

The letter warns the Chancellor that this significant tax burden is damaging enterprise.

“This Budget comes at a crucial time when the trade is facing upheaval as the new trading landscape unfolds. By cutting wine and spirit duty the Chancellor would be allowing British business to invest and grow,” said Miles Beale, chief executive, WSTA.  

If government chose to increase what are already some of the world’s highest alcohol tax rates, it would not only push up prices for people who voted them in, but would also hit hard an SME-heavy industry that “prides itself on flying the flag for brand Britain”, he added. 

“Duty rises are bad for consumers, bad for British SMEs – which are the backbone of this successful British industry – and also bad for the Exchequer, as the government’s latest figures clearly show. After wine was singled out for a duty rise wine revenues have fallen on the previous year, in line with a slump in wine sales.” 

Since 2014 duty on wine has increased by a staggering 12%. In the year 2018/2019, the heavy tax burden facing the UK’s gin and vodka producers meant they paid 52% of all spirits duty receipts collected across the EU.

By delivering a freeze to wine and spirits in 2017 the Treasury landed a bumper tax windfall and at the same time helped cash strapped consumers and gave a boost to British businesses.

But the respite was short lived. In 2018 the Chancellor chose to once again freeze spirit duty but singled out wine for an unfair duty rise. 

In the last six months since the wine duty hike there has been a slump in wine sales leading to a 2.1% drop in revenue to the Exchequer – falling to £2.4bn down from just over £2.5bn, according to the government’s recent Alcohol Duty Bulletin. 

If the same rate of decline continues forecasts show the Treasury will lose £93m in 2019 compared to 2018.

For beer and spirits, both of which received a duty freeze at the last Budget, the revenue income was more positive with beer up 2.4% and sprits up 1.7%.

The band of British businesses united in calling for a duty cut includes England’s top vineyards, small distilleries and a specialist wine merchant.