Booze sales could be damaged with duty freeze cut

04-Jul-2018 - Last updated on 04-Jul-2018 at 08:07 GMT

Industry threat: any plans to raise duty could impact alcohol sales

Related tags Duty Wine Spirits Beer Cider Duty hikes

Scrapping the alcohol duty freeze put in place last year by Government is “counter-productive”, and will increase pressure on cash-strapped consumers, the Wine & Spirit Trade Association has warned (WSTA).

Reports in The Guardian yesterday (3 July) suggested MPs are lobbying Government to ditch the alcohol duty freeze to help raise an additional £20bn of financial support pledged for the NHS.

However, despite a freeze on duty in November, Government raised record funds from booze sales, which rose by 2% to £3.291bn.

WSTA chief executive Miles Beale gave a stark warning that any plans to ditch the freeze could significantly affect sales of alcohol in the UK.

Freeze on alcohol duty

“There is no ‘freeze’ on alcohol duty,” said Beale. “The Government’s policy is to increase levels of duty in line with RPI inflation, which currently sits at around 3.5%.

“The WSTA successfully campaigned last November to have the Chancellor waive this rise, and duty levels did not increase [in the previous] Budget, however, this followed a rise of over 3% in March 2017.

“Recent WSTA analysis has shown that by freezing duty last time out, [Chancellor of the Exchequer] Philip Hammond actually raised revenue for the Treasury.”

Between December 2017 and April 2018, all alcohol duty collections – including wine, spirits, beer and cider – were up year on year. The increase flooded Treasury coffers with an additional £86m in spite of the freeze.

Bid to ease pressure

“We believe that raising the rate of alcohol duty is counter-productive and we will continue our calls for Government to back the UK’s wine and spirit industry and help to ease pressure on cash-strapped consumers,” pledged Beale.

Last year was the second time in 15 years wine duty was frozen, even though the category is one of biggest revenue earners for the Government, bringing in 37% of duties from 18% of sales.

“We have always said a freeze on alcohol duty is a win-win for both the Treasury, the wine and spirits trade and consumers,” said Beale in a previous statement.

“We hope the latest windfall to Treasury coffers coming from the Budget freeze encourages the Chancellor to continue to stay in touch with what consumers want and support an industry that is proving to be a real asset to British business by rebalancing the UK’s excessive duty rates in this year’s Budget.”