Trade Diary
| 04 February 2012 | ||
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Taxation
Year-on-year duty increases, combined with the growing regulatory burden, are placing a huge amount of pressure on the sector. UK tax- duty plus VAT- now accounts for 74 per cent of the average price of a bottle of spirit and 56 per cent of a bottle of wine. A period free of excessive duty rises would allow the wine and spirit sector to grow in both confidence and value, and play its part in the UK’s economic growth. The WSTA would like to see the duty escalator - which increases alcohol duty by 2 % above inflation each year - scrapped.
The Budget
As well as our routine engagement with decision-makers with influence over taxation policy, the WSTA prepares an evidence-based annual Budget Submission to the Chancellor of the Exchequer. This presents evidence about the health of the wine and spirit sector and emphasises the significant contribution the sector makes to the UK economy. In recent years, we have highlighted the negative impact of the duty escalator imposed in 2008.
- Click here to access the WSTA’s Budget Submission for 2011
- Click here to access the current duty rates
The Alcohol Taxation Review
In July 2010, the Treasury launched a review of alcohol taxation to consider the rates and structure of duty on different products, the interaction between tax and price and potential options to increase the taxation of high-strength drinks.
The WSTA response to the review argued that alcohol duty should remain a revenue-raising measure and not be used as a public health tool in an attempt to reduce harmful consumption. It is not possible to single out ‘problem products’ or ‘problem drinkers’− harmful drinkers consume the same products as everyone else. There is also no robust evidence of a clear correlation between higher taxation and reduced harm from alcohol. There are other, more effective ways of tackling alcohol misuse. This is best achieved through a genuine partnership between industry and Government, which is why the WSTA is playing a leading role in work on the Public Health Responsibility Deal.
We welcomed the Government’s announcement that as a result of the review, there were no changes proposed by the UK Government to the structure of duty on wine and spirits.
EU Review of Alcohol Excise duties
Alcohol duty rates and structures in the UK must comply with European Directives on the structure and minimum rates of alcohol duty. Under this legislation, beer and spirits must be taxed in direct proportion to the alcohol they contain. Wine and cider must be taxed in strength bands.
The European Commission is currently considering whether the rates and structure of alcohol duty in the EU requires reform. It commissioned a wide-ranging report, carried out by the London School of Economics, which raised a number of issues, including a lack of harmonisation in duty rates and large price differences across the EU. The Commission is analysing the conclusions of the report and has not yet made a decision on what, if any, action it will take. The WSTA is liaising with the Commission’s Taxation and Customs Division to emphasise the willingness of the trade to work with them on excise duty policy.
