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WSTA calls on Chancellor to cut duty in spring budget

Published:  25 January, 2024

Faced with falling wine and spirit sales and subsequent diminishing revenues to the Exchequer, the Wine & Spirit Trade Association (WSTA) has called upon the Chancellor to reduce duty on the sector in the 6 March Spring budget.

In a submission to the Treasury on 24 January, the trade association highlighted that UK alcohol inflation has almost trebled from 3.5% in January 2023 to 8.9% for spirits, 7.8% for wine and a whopping 18.7% for the beleaguered fortified wine category.

This followed the imposition of a new excise duty regime on 1 August 2023, which hiked spirits duty to over 10%, with the duty most wine still wine increasing by 20% or more.

‘Wine duty was last cut in 1984 when Nigel Lawson was Chancellor. Spirit drinkers haven’t enjoyed the benefits of a duty cut since 2015, under the last coalition government,' highlighted the WSTA.

With consumption of wines and spirits falling among younger generations, the trade’s argument is that duty hikes are further supressing sales across the market, which is now increasingly depressing revenues raised for the Treasury.

“Last year’s duty increases have had an immediate and negative impact on wine and spirit sales volumes. Not only has this hurt British businesses, it has fuelled inflation and reduced excise duty receipts,” said Miles Beale, WSTA chief executive.

“Recent history has shown that cutting excise duty leads to increased sales, keeps price rises down for consumers and brings more revenue into the Exchequer. We are calling on the Chancellor to check the records and take action that will benefit Treasury coffers, British business and consumers – cut duty rates and give everyone a much-needed boost.”

The submission also called for the Chancellor to ‘make permanent it’s temporary easement for wine’, referring to the grace period until the end of January 2025 when the current single duty payment of £2.67 on wines between 11.5-14.5% abv is to be replaced by 30 incremental duty rises according to degrees of alcohol.

Not only will this amount to a second, big rise in duty for around 80% of wine sold in the UK (wines above 12.5% abv), the red tape involved in implementing this will heavily impact importers and retailers, and especially SMEs.

Beale added: “Making the wine easement mechanism permanent to prevent the impact of more red tape and higher running costs would bring relief and improve business planning certainty for the UK’s SME-rich wine industry. The prospect of losing the easement continues to be their single biggest concern. The Government needs to listen and do the right thing.”