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Don’t punish wine and spirit drinkers with price hikes – WSTA urges Treasury



The Wine and Spirit Trade Association met Financial Secretary Jane Ellison MP, on Monday, to explain why increasing wine and spirits duty would deliver an unfair triple whammy for consumers.

The trade body warned the Minister that if duty goes up on March 8th consumers’ key concern will be exacerbated further. Coming on the back of the already staggeringly high taxation in the UK, price rises driven by the increase in cost of imports due to the plummeting pound and impending inflation, an increase in excise duty would badly damage consumer confidence.

At the same time, the WSTA provided the Finance Secretary with evidence for optimism showing that a modest 2% cut would bring a boost to the UK drinks industry, jobs and consumers – as well as growing the public finances.

 

WSTA Chief Executive, Miles Beale, said:

“Britons already pay more than 68% of all still wine duties collected in Europe and over 27% of all spirits duties. It is deeply unfair that hard pressed UK consumers already pay more than the Germans, French, Italians and Polish combined. If duty goes up – on top of the effects of the plummeting pound and rising inflation – it will inflict a triple whammy on British consumers. And yet doing just the opposite would be win, win, win. A 2% duty cut for wine and spirits would benefit consumers, would benefit our industry and would benefit the Treasury through additional revenue - just as it did two years ago.” 

 

Miles Beale, WSTA Chairman Dan Jago and Chair of the wine and spirit APPG Tim Loughton MP, joined forces to urge Ellison to back British businesses and give them direct support to earn breathing space on the back of Brexit and the fall of the pound.

They warned that a lack of government support will drive up costs for consumers, jeopardise some of the 554,000 jobs generated by the UK wine and spirit industry and the £17.7bn it contributes to the public purse.

The meeting came as an exclusive polling commissioned from YouGov showed that 71% of the public are concerned about the prospect of higher inflation this year – 82% of those are aged over 65.

The message delivered to Jane Ellison was clear - a 2% cut would result in a three way win, while any increase would bring British consumers a triple whammy of price rises and Government would lose extra revenue for the public coffers.

The UK wine and spirit industry is facing a tough trading landscape and any duty increase in the current climate would be devastating to business, stifle investment and threaten jobs.

If the Chancellor made the bold decision to make the 2% cut for wine and spirits independent economic modelling, conducted by EY, shows that this would provide an extra £368m to the Treasury.

These calculations are backed up by a recent duty cut success story. After a freeze in wine duty in the 2015 Budget, wine duty income increased by £136m (+3.6%) the following year and after a 2% cut in spirits duty that year, spirits duty income increased by £124m (+4.1%) over the same period.

A cut would also boost international trade and help us maintain the UK’s position as the central player in the global wine trade, as well as remaining the world’s largest spirits exporter.

Ellison – previously of the Department of Health - is now responsible for the UK tax system which sees the wine and spirit industry paying in £17.5bn in tax every year. The meeting provided an opportunity to convey that a cut would add a further £2.9bn (+6%) in economic activity pushing the industry’s value up to more that £50bn.   

 

Dan Jago, Wine and Spirit Trade Association Chairman said:

“Having worked in the wine and spirit retail industry of 30 years this is one of the toughest times the trade has seen as it faces a future of uncertainty and inevitable price rises for imports from around the globe. We are asking for a modest 2% cut to wine and spirit duty, which is within the Chancellor’s gift and which would give the trade the confidence that Government is supporting British business. It will also give hard pressed consumers a better deal.”

 

 

Tim Loughton, MP, said:

“I strongly support the WSTA’s call to back British business and ask the Chancellor to level out the playing field for unfair taxation on wine and spirits at the next Budget.”

 

 

ENDS

Notes to editors:

Last week the WSTA announced  that between Brexit, inflation and duty average-priced bottles of still wine could go up by 10%

Wine and spirits duty facts

- The UK wine industry generates £11bn in sales and £9.5bn in total contributions to the public purse

- The UK spirit industry generates £10bn in sales and £8.2bn in total contributions to the public purse

- Wine businesses and consumers pay £4bn in duty and spirits businesses and consumers a further £3.2bn.
- The duty on a bottle of wine is £2.08, meaning that 55% of the cost of the average bottle in shops and super markets is taken up in tax and VAT.
- The duty on a 70cl bottle of spirits is £7.26, meaning that 76% of the cost of the average bottle of spirits in shops and supermarkets is taken up by duty and VAT.
- Duty rates for wine have increased by 56% since 2007 and spirits duty rates have increased by 41%
- Compared to an inflationary rise of 3%, a 2% cut in duty would be worth 10p for a bottle of wine, 13p for a bottle of sparkling wine and 55p for a litre of spirits
- UK businesses and consumers pay the 4th highest duty rate for spirits in the EU accounting for a quarter of all Spirits Duties (27.29%).
- UK businesses and consumers pay the 3rd highest duty rate for wine in the EU accounting for 68.4% of all duties collected by member states.

- Wine sales in pubs have grown by £52m in last 3 years.

- Since 2012, spirits have added £634m (+21% or a fifth) in value sales to pubs of which £271m (+8%) was sold in the last year. These growth rates far exceed any other category with Beer up +1%; Cider - +2% since 2015.

The EY modelling revealed that 2% cut would:
 
 ·         Increase overall economic activity in the wine and spirit sector by £2.9bn (+6%).
 ·         Increase overall revenues to the Treasury by a projected £368m (+2%).
 ·         Increase industry contributions to the UK’s GDP by a projected £1.6bn (+6%).

 

The WSTA is the UK organisation for the wine and spirit industry, representing over 300 companies producing, importing, transporting and selling wine and spirits. The WSTA works with its members to promote responsible production, marketing and sale of alcohol.

 

For more information please contact:

Lucy Panton

Tel: +44 (0) 207 0893875

Mobile: + 44 (0) 7776422656

Harriet Talbot

Tel: +44 (0) 207 0893875

Mobile: +44 (0) 7587290720

Twitter @wstauk

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