WSTA warns against fresh tax increases

3 February 2011

The WSTA is urging the Treasury to abandon its alcohol tax escalator after retail figures for 2010 showed the UK wine market in decline with sales down 2% and sales of spirits flat.

The tax escalator threatens to deliver a 6.8%¹ tax increase on alcohol next month. If it goes ahead it would mean that in just three years tax on wine had increased by 35% and tax on spirits by 30%.

The 2010 retail data² shows that sales of wine and spirits fell in pubs and restaurants (down 4%) and shops (down 1%) as consumers reined in their spending. Against this backdrop the small increase in the value of wine sales (up 3%) reflects the impact of tax increases while industry has had to absorb rising costs of energy, transport and raw materials.

WSTA Chief Executive Jeremy Beadles said:

"With the recent VAT increase adding to the weekly shopping bill, it's no time to force drinks prices up further with another inflation busting tax increase.

"The scale of tax rises on wine and spirits in recent years has cost thousands of jobs and made matters worse for households struggling to cope in difficult economic circumstances.

"Abandoning the tax escalator would help hard-pressed consumers and a sector which ought to be part of the drive to restore economic growth in the UK."


Notes to editors

¹ This is based on a RPI to December 2010 of 4.8% (source: ONS, January 2011). To date HM Treasury has based its calculation on combination of RPI for 6 months prior to Budget and RPI forecast for 6 months post-Budget.
In March 2008 the Chancellor announced a 9% increase in alcohol duty and his intention to introduce a 4 year tax escalator, increasing duty rates by 2% above the rate of inflation from the time of the 2009 Budget. In March 2010 the Chancellor announced that all alcohol duty rates would increase by 2% above inflation for two further years, until 2014-15.
² Sales figures are provided by Nielsen and CGA Strategy.

The WSTA Budget submission can be viewed here:

The WSTA is the UK lobbying organisation for the wine and spirit industry representing over 330 companies producing, importing, transporting and selling wines and spirits.
We campaign to promote the industry's interests with governments at home and abroad.
We work with our members to promote the responsible production, marketing and sale of alcohol.

For more information please contact Gavin Partington:
Tel:  +44 (0) 20 7089 3876
Mob:  +44 (0) 7966 014058
Email: [email protected]

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