Diageo calls for alcohol tax shake-up

Published: 31 August, 2010

Diageo has called for an alcohol tax shake-up which would hike the duty on beers, wine and cider to the same rate as spirits.

Diageo's recommendation would mean duty on a 10-unit bottle of wine would increase by around 40% from £1.67 to £2.38 within five years.

The drinks giant outlined the measures in its response to the government consultation, Review of alcohol taxation and pricing, which closes today.

Diageo proposes a staged reform of excise duty on the basis of "full equivalence between all alcohol types", so that a unit of alcohol in spirits, wine, beer, cider and RTDs is taxed at exactly the same rate. The proposal would mean that stronger drinks would pay more tax.

It suggests the simplest way to implement this would be to hold spirits duty at its current level and use the 2% above inflation alcohol excise duty escalator to move other categories of alcohol up to the level of spirits duty over time.

Simon Litherland, managing director of Diageo Great Britain, said: "We strongly believe that alcohol excise duty is, and should remain, solely an instrument for raising revenue.

"Our recommendation to the Treasury is the fairest and most transparent way to approach taxation of alcohol, it will bring revenue to the government and will mean that the more alcohol in the drink, the more tax it will pay.

"Alcohol is alcohol and we believe that people should know they are paying the same tax per unit whether it is a pint of Guinness, a glass of Blossom Hill or a glass of Johnnie Walker."

According to the firm, equalising the tax on all alcohol would generate between £524 million and £1.9 billion a year for the Treasury.

Diageo is also using its submission to restate its opposition to the Government's suggested 'problem drinks' tax ? which could see extra tax added to drinks linked to binge drinking, such as RTDs.

Litherland continued: "The proposal to target a tax at RTDs is unfair, inconsistent and disproportionate to the problem. Our solution is to tax all drinks according to their alcohol content. Such an approach will mean strong drinks with more alcohol in them pay more tax."

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