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Budget 2024: ‘Last ditch plea’ for alcohol duty cut
More than 100 wine and spirits producers and the Wine and Spirit Trade Association have made a last ditch plea to the Chancellor of the Exchequer to cut alcohol duty.
In a letter from the WSTA and 120 businesses, the sector called on chancellor Jeremy Hunt and exchequer secretary to the Treasury Gareth Davies to “help prevent further price rises for consumers, drive down inflation and increase income to the Treasury”.
It also called to make “permanent the wine easement will save thousands of wine businesses pointless and costly bureaucracy.”
The news follows HMRC excise duty receipts last week which showed the Treasury lost £436m between September 2023 and January 2024 compared with the same period in 2022/23 and when added with beer and cider, came to more than £600m.
Changes to the alcohol duty system in August 2023 were the most significant in 50 years, adding 20% to excise duty on more than 85% of all wines on the UK market, and more than 10% to duty paid on full-strength spirits.
As a result of the move, sales volumes have declined, alcohol inflation has risen to more than double the headline rate, while revenue from duty receipts has declined, the WSTA said.
In addition, in the upcoming WSTA market report, in the twelve weeks to December sales of spirits and wine were in decline in Britain’s supermarkets and shops, with spirit volume sales down 7.1% and wine down 4.1%.
Red tape
Another call is also being made to cut unnecessary red tape by the sector. The “costly and fiendishly complex” new taxation plans, due to come into force from 1 February 2025, have been described as “un-administrable” and “sheer lunacy” by WSTA members.
Instead, the Chancellor should keep in place the temporary, simplified procedure for taxing 85% of wines on the UK market, it has argued.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said: “Wine and Spirit businesses across the country are urging the Government to do the right thing at the Budget next week: support British business and boost Treasury coffers by cutting alcohol duty. Record high duty hikes last August have now been shown to achieve the exact opposite – and have instead fuelled inflation and significantly reduced excise duty receipts to the Exchequer.
“The cost to businesses will run into millions and millions of pounds. Unfortunately, the same businesses will have no choice but to pass on these costs to already cash-strapped consumers. We are calling on the Chancellor to do himself – and everyone else – a huge favour by cutting alcohol duty and making the wine easement permanent.”
What is the wine easement and why do we need to make it permanent?
Miles Beale, Chief Executive, explains…#CutDrinksDuty #WSTA #WineAndSpirits #Duty #WineEasement @WSTA_Miles @Jeremy_Hunt @hmtreasury pic.twitter.com/zhrSULXrMY
— WSTA (@wstauk) March 1, 2024
Retail
The calls are also backed by major wine retailer Majestic, with its CEO John Colley stating the government’s duty system plans “fail on every measure”.
He said: “The proposed change from one duty band to 30 different bands based on ABV will be bad for retailers, hospitality businesses, consumers and the wine industry. Common sense needs to prevail and this needs to be stopped.
“Implementing this overly complicated policy not only increases costs, but will result in international wine producers avoiding the UK due to more red tape. It is anti-business, anti-growth and anti-jobs.”