WSTA calls for duty cut in spring Budget

The Wine and Spirit Trade Association (WSTA) has highlighted still wine hasn’t been given a duty cut in 40 years, as part of its latest set of Budget asks to the Treasury.

The trade body is calling on Chancellor of the Exchequer to announce a duty cut in alcohol following last year’s reclassification based on ABV and changes in duty which has resulted in the UK having some of the world’s highest wine and spirit duty rates.

As a result of the move to higher rates, the WSTA said this month’s surprise rise in inflation to 4% was due to an increase in tax on alcohol, as well as less revenue for the Treasury from falling sales — a scenario the association had warned could occur.

In response to those figures, chief executive of the WSTA, Miles Beale, highlighted how alcohol inflation was three times the rate of a year ago and said “if the government is serious about taking measures to cut inflation the simple answer is to cut alcohol excise duty at the next Budget.”

In January last year alcohol inflation was 3.5%. But it’s now almost trebled, with spirits at 8.9%, wine at 7.8% and fortified wine sitting at 18.7%.

The body argued that it was Nigel Lawson as Chancellor in 1984, who himself used to drink a wine spritzer at the dispatch box on Budget day, who was the last politician to cut duty on wine.

In addition, spirits haven’t had a duty cut since 2015, under the last coalition government and almost a decade ago.

When the new excise duty regime was introduced in August last year, spirit duty increased by over 10% and the duty on the vast majority of still wine sold in the UK increased by at least 20%.

Miles Beale, chief executive of the WSTA, said: “Last year’s duty increases have had an immediate and negative impact on wine and spirit sales volumes. Not only has this hurt British businesses, it has fuelled inflation and reduced excise duty receipts.

“Recent history has shown that cutting excise duty leads to increased sales, keeps price rises down for consumers and brings more revenue into the Exchequer. We are calling on the Chancellor to check the records and take action that will benefit Treasury coffers, British business and consumers – cut duty rates and give everyone a much needed boost.”

In a submission sent to the Treasury, the WSTA is also calling for the Chancellor to make permanent its temporary easement for still wine.

It argues that maintaining the approach for taxing for wine that it introduced in August would make little difference to duty receipts, but would avoid further significantly red tape costs to business, in particular SME wine importers and retailers.

While it agreed that the “new system may appear simpler in a spreadsheet” it said “in practice, for the wine sector, it is categorically the opposite”.

If the easement ends, a single amount of duty paid on wines between 11.5-14.5% ABV — £2.67 — will be replaced with 30 different payable amounts, the association said.

The Government’s own figures show duty receipts for spirits were down by 19% from September to December 2023, compared to the previous year, highlighting the need for change.

Miles Beale added: “The WSTA is fully aware that there are significant pressures on the public purse and significant pressure to reduce Government debt. With the economic recovery so fragile we believe that cutting duty at the Budget would better support the Government’s aim to reduce inflation, would stimulate growth and maximise revenue to the Exchequer.

“In fact, we are confident that the whole UK drinks sector is united in its support for this action by Government.”

“Making the wine easement mechanism permanent to prevent the impact of more red tape and higher running costs would bring relief and improve business planning certainty for the UK’s SME-rich wine industry. The prospect of losing the easement continues to be their single biggest concern. The Government needs to listen and do the right thing.”