‘Unfair’ tax on wine sets ‘provocative’ mood for post-Brexit FTAs

Increasing the ‘unfair’ tax on wine in the UK has been viewed as a “provocative” move by wine producing nations with whom the UK hopes to sign trade agreements after Brexit, MPs have been warned, .

The Houses of Parliament (Photo: Flickr)

Speaking to the Commons international trade select committee yesterday last week (9 January), The Wine & Spirit Trade Assocation’s (WSTA) European and international affairs director  Simon Stannard warned MPs that the increase in tax on wine at the last budget had upset Australian producers, who account for around 20% of the total wine imports brought into the UK.

Stannard said that while excise duty fell outside the arena of free trade agreements (FTA), it could influence the mood in which these agreements could be made.

“The Chancellor singling out wine for an increase in duty from 1 February while freezing beer and spirits has been seen as provocative by wine producing countries, as it is seen as favouring domestic products over imported,” he told MPs.

“We were very disappointed and it has upset [producers]. We know it’s gone down very badly in Australia, just in terms of setting the mood for future trade relations if one of Australia’s major agricultural exports is being seen to be treated unfairly,” he said.

“Fair taxation is important to talk about in terms of market access.”

Although the tax increase amounted to around 10p on the price of a bottle of wine (including  VAT) this would have a big effect, he added and put the pressure on producers.

“When we’re talking about the value end where margins are small per case, that’s enough to wipe out your margin as a business, even though it’s a relatively small increase in taxation,” he said.

He argued that it was important for government to discuss areas traditionally outside the scope of a FTA, such as market access and non-tariff related costs for producers.

The WSTA also wants to see the Australia-EU wine agreement currently in discussion “rolled over” to the UK, to ensure the sames standards are enforced until a UK-Australia FTA is signed. “It’s just a question of will it be ready in time,” he said.

The committee was taking evidence from the industry for its inquiry into post-Brexit FTAs with Australia and New Zealand, which together account for around 30% of all the wine imported into the UK, worth about £2 billion in sales.

MPs were also warned that winemakers were “seriously” considering shifting bottling away from the UK to mainland Europe if a no-deal Brexit results in increased red tape, trade barriers and tariffs.

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