WSTA tells government 'It’s not too late to scrap hikes'
With just one month till the government’s alcohol tax hikes are effective, the Wine and Spirits Trade Association (WSTA) has reiterated why the “crippling” duty increases should be scrapped.
From August, wine duty is set to increase by 20% and spirits duty by over 10% as part of the biggest single alcohol duty increases in almost 50 years. The new legislation means all alcohol will be taxed by strength which would disproportionately affect some higher ABV wines from hotter regions. As well as reducing consumer choice the duty hikes will bring price rises for 90% of wines sold in the UK.
The hikes would be detrimental to the drinks industry in the best of times, but, as it happens, interest rates are at their highest since 2008 and consumers have been severely hampered by the cost-of-living crisis.
In its plea to the government, The WSTA restated that “it’s not too late to scrap crippling duty hikes” and bring some respite to wine and spirit businesses and consumers.
Miles Beale, CEO of the WSTA, said: “We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation – especially for food and drink – and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won’t be able to stay afloat, with SMEs most at risk.
Amongst all this pressure the government has chosen to impose more inflationary misery on consumers on 1 August, with the biggest single alcohol duty increase in almost 50 years. But it’s not too late to scrap these crippling duty hikes.”
He continued: “Ultimately, the government’s new duty regime discriminates against premium spirits and wine more than other products. Wine from hotter countries – like new trade deal partner Australia – will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines. And, at the same time, you cannot reduce alcohol in wine like you can for some other products. Making wine isn’t an industrial process; reducing wine’s alcoholic content is limited, changes the product and is costly to carry out. Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength prescribed by law.”
According to the WSTA, the price will increase by £1 per bottle for gin, vodka and wine. However, the rises will arguably have the biggest impact on fortified wines including sherry and port, which will see duty rise by 44% (+VAT) adding around £1.50 to a bottle.
Sir Graham Brady, chair of the 1922 Committee and chair of the All-Party Parliamentary Group (APPG) for Wine and Spirits, said: “We can be proud of Britain’s position as a global hub for the wine trade, but that position must not be taken for granted. The new duty increases represent self-inflicted damage to the sector, creating significant bureaucratic challenges for SMEs with the potential for job losses and increased cost to the consumers”.
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