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 79 per cent of the average price of a bottle of spirits and 57 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.
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.
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.