Darling confirms VAT hike

Published: 09 December, 2009

There was little Christmas cheer for the drinks trade in this year's pre-Budget report.

Chancellor Alistair Darling confirmed VAT will revert to 17.5% from January 1, and did not announce any changes to his plans to increase alcohol duty by 2% above inflation next year, despite intense lobbying from the trade.

The trade had been hoping the extra 8% put on wine duty in November 2008 to offset the cut in VAT to 15% would be removed, but the Chancellor said there would be "no other changes" as a result of the change.

Jeremy Beadles, chief executive of the WSTA, said: "Today's confirmation that these tax increases will remain in place is disappointing for the trade and the millions of British consumers they serve, though sadly it is not surprising given the state of public finances."

"This means that since last year's Budget excise duty has gone up by around 20% for wine and 16% for spirits - excessive increases at a time when most families are feeling the pinch."

The WSTA warned earlier this year that more than 75,000 jobs would be at risk as a result of the increases, and alcohol sales would drop by 11%.

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