The government has ‘failed to support a great British industry,’ according to the Wine & Spirit Trade Association (WSTA), in its decision not to cut alcohol duty.
Chancellor Philip Hammond today announced there were to be no further increases in alcohol or tobacco duties on top of those previously announced, as part of his final Spring budget. However, that means that wine, spirit and beer duty will continue to rise by inflation.
The decision will see duty increases of around 2p to the price of a pint of beer, and 36p a bottle for spirits. The increases will be effective from 13 March 2017.
The announcement was met with angry reactions from the trade today, with a number of trade bodies calling for duty reform.
Miles Beale, chief executive of the Wine & Spirit Trade Association, said: ‘It is disappointing that the chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.
‘Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help-out struggling consumers.’
He added that: ‘The added uncertainty of another Budget in 6 months’ time is unwelcome and will further undermine business – and consumer – confidence.’
The Scotch Whisky Association had been campaigning for a 2% spirits duty cut. Julie Hesketh-Laird, SWA acting chief executive, said: ‘A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress.
‘At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit. Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law. The system is in need of a fundamental review and reform to make it fair and competitive.’
Charles Ireland, managing director, Diageo Great Britain, has described today’s decision as a ‘tax blow’ and ‘bad for business and bad for the economy’.
He added: ‘It is staggering that the Prime Minister stood up in Scotland only on Friday and said that Scotch whisky is ‘a truly great Scottish and British industry… and directly supports tens of thousands of jobs’, and just five days later her Chancellor hammers this industry at home.
‘Tax on Scotch whisky is now so high – nearly 80% of the price of an average bottle will go straight to the Government. We believe this duty rate increase will reduce total tax revenue. We are calling on the Government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.’
Simon Robinson, chairman of English Wine Producers has also spoken out. ‘It is very disappointing that yet again the wine sector has been hit by what amounts to a real-terms increase in duty, ignoring the pleas from the UK wine industry, as a fast-growing sector, and the wider wine trade that higher taxes are damaging trade and hitting the UK wine consumer,’ he said.
‘The UK wine industry will be focusing on duty issues over the coming months to look at this in more detail and to discuss further with Government. This will include matters such as equalising duty on still and sparkling wines as well as focusing on the opportunities that lower duty could have on our industry in a post-Brexit world.’