WSTA calls on Chancellor to freeze alcohol tax ahead of Autumn StatementBy Edith Hancock
The WSTA is calling on Philip Hammond to freeze alcohol duty in the Autumn statement, claiming that a tax hike would damage the UK’s negotiating power post-Brexit and cost the alcohol industry £220m.
Rates of tax are expected to rise by 3.4% in the November Budget in line with RPI, the second time the Chancellor will increase alcohol duty this year, according to the Wine and Spirits Trade Association (WSTA).
Back in March, Hammond raised all alcohol duties by 3.9%, adding 8p to the cost of an average bottle of wine, and 30p to spirits.
The latest increase on 22 November will see wine become 7p more expensive, while the price of spirits would on average rise by 26p.
But the WSTA warns that further tax hikes could weaken the UK’s bargaining power as the government begins to negotiate post-Brexit trade deals.
The UK alcohol industry is one of the most heavily taxed in Europe, with British drinkers paying an 68% of all wine duties collected by all 28 EU member states and 27% of all spirits duties. Miles Beale, chief executive of the WSTA, claims that the government is sending the industry “mixed messages.”
“On the one hand Liam Fox is championing the importance of imports to the UK,” he said. “At the same time Philip Hammond is revving up to hit us with a second inflation busting hike in seven months in alcohol duty – making the UK less attractive to importers.”
The wine and spirit trade with the EU is worth almost £4.5 billion to the UK. The WSTA said a second rise would cost the wine and spirit industry around £220m in new tax liabilities.
But alcohol industry leaders argue that a duty freeze would increase revenues and provide a boost to the economy. When spirits duty was frozen in 2016, revenues actually increased by 7% the following year, according to the WSTA.
UK alcohol exporters say they have already been hit hard by the EU Referendum, and a further tax increase could severely damage European business.
Ade McKeon, general manager UKIR of Accolade Wines, said: “As an international wine company we have to consider our investment decisions carefully. We want government to take a reasonable approach to excise – and not impose a second excise duty increase this year.”