EU COMMISSION SUPPORTS CONVERGENCE

Published: 23 July, 2008

The Wine & Spirit Association (WSA) has welcomed the European Commission's report on duty rates which, if adopted, could force the Chancellor to freeze excise duty on alcoholic drinks. The report recommends a minimum and maximum rate of tax for each category, and any country above the maximum will not be able to increase duty. To fall between the two tariffs, the UK would have to reduce rates by approximately 50% for still wine and beer, and between 24-67% for other drinks categories. It also recommends that the luxury surcharge' on sparkling wine, introduced in the UK in Victorian times, should be abolished. Sparkling wine duty should be cut to bring it into line with still wines (currently a 50p per bottle duty differential in the UK). WSA director Quentin Rappoport said: We are delighted to see so many of our arguments accepted in the commission's report, and urge the Chancellor to go further than a freeze on duty and actually start a systematic programme of duty cuts. It makes no sense at all for us to be in a "Common Market" but not to be competing on a level playing field. The UK trade and the Exchequer lose out every time a bottle is bought by Brits abroad, and in the longer term the consumer is adversely affected by increased crime, as a result of smuggling and fraud,' said Rappoport. The WSA is concerned that the maximum rates for spirits and intermediate drinks, such as fortified wines, are high. We would prefer to see the levels of these sectors about a third lower than those recommended by the commission,' added Rappoport. The introduction of a positive minimum rate for wine - against the present zero rating - is also a cause for concern, as it could potentially reduce the pressure to keep duty rates low across Europe and hamper the ultimate abolition of duty on all beer and wine across the EC,' said Rappoport.

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