A campaign calling for the abolition of a “super tax” on alcohol was launched at the House of Commons last night.
Dozens of MPs and representatives from the wine and spirits sector gathered to see the launch of ‘Call Time on Duty’ – a campaign spearheaded by The Wine and Spirit Trade Association (WSTA), Taxpayer’s Alliance and Scotch Whisky Association, and sponsored by MP Priti Patel.
Since 2008 the alcohol duty escalator has automatically increased the rate of taxation on wine and spirits by 2% above inflation each year.
This means that for an average bottle of spirit 79% of its purchase cost is accounted for by tax, and 57% for wines.
Unless the escalator is scrapped in 2014, this figure will go up to 80% and 60% respectively.
MP Priti Patel
In 2012 the wine and spirit sector paid a total of £14.5 billion in tax which MP Priti Patel branded a “punishing regime.”
Last year the Tax Payer’s Alliance successfully campaigned to abolish the duty escalator on beer and on fuel and now they are calling for the same treatment of wines and spirits.
It’s abolition, independent research by Ernst and Young has shown, would actually create 6,000 jobs and pump £230m into the public purse by allowing companies to grow.
Speaking at the event last night Jonathan Isaby, chief executive of the Tax Payers’ Alliance, said: “Duty escalators on particular products are not fair on consumers.
“They make goods increasingly expensive and by their nature hit the poorest the hardest.”
He added: “Not only will this be fairer on the consumer, but – as the Chancellor also accepted was the case with the abolition of the duty on beer – it will help businesses up and down the country and provide benefits for the wider economy.
“The more expensive you make the drinks with ever higher duties, the more likely you are to drive people to buy their drinks from those operating within the black economy. And guess what, Chancellor, once people are lured into buying their drinks on the black market, you get zero revenue for the Exchequer.”
Miles Beale, chief executive of the WSTA , said: “Independent research shows that by scrapping the escalator in his 2014 budget, the Chancellor would unlock the generation of an extra £230 million a year for public finances and the creation of 6000 new jobs.”
He added: “Together our voice can be heard. To the politicians in the room, I simply repeat: when we ask for the escalator to be scrapped, we’re not asking for a favour or for money. The escalator’s demise in two months’ time would represent a net gain, not cost.
“Our message to the Chancellor is clear: if you’re serious about creating jobs, supporting growth and cutting taxes, then you need to be fair and call time on your inflation-busting super tax now. Scrap it, do something good for the consumer, for the economy, for business, especially SMEs, and be the toast of all three.”