WSTA: 'duty cut would offer much-needed boost'
Alcohol inflation stood at 3.5% in January 2023 but has since almost trebled, with spirits at 8.9%, wine at 7.8% and fortified wine sitting at 18.7%, the association said.
The association estimated the average price of a bottle of gin was now more than £17, an increase of £1.50 since the duty rise in August last year, arguing the only way to reduce alcohol inflation was to cut excise duty following the “disastrous” duty hikes last year.
Moreover, it claimed wine duty was last cut in 1984 when Nigel Lawson was Chancellor, adding spirit drinkers haven’t enjoyed the benefits of a duty cut since 2015, under the last Coalition Government.
WSTA chief executive Miles Beale said: “Last year’s duty increases had an immediate and negative impact on wine and spirit sales volumes, hurting British businesses, fuelling inflation and reducing excise duty receipts.
Much-needed boost
“Recent history has shown 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.”
The association also called for Chancellor Jeremy Hunt to make the temporary easement for still wine permanent.
It said maintaining the approach for taxing wine introduced in August would make “little difference” to duty receipts, but would avoid further red tape costs to business, in particular SME wine importers and retailers.
The association also stated Government data showed duty receipts for spirits were down by 19% from September to December 2023 against the previous year.
“While the new system may appear simpler in a spreadsheet, in practice, 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”, Beale warned.
Significant pressures
The drinks trade body added a lower tax environment and further Government support for small businesses would ease declining sales against an “incredibly challenging” economic backdrop.
In addition, it predicted limited growth for the sector in 2024 with persistent food and drink inflation putting the hospitality industry “under strain”.
This comes as data from Oxford Partnership earlier this week revealed a 5% beer duty cut could create 13,000 jobs across the sector while brewing trade bodies joined forces to urge Hunt to increase draught relief to 20%.
Beale added: “The WSTA is fully aware there are significant pressures on the public purse and to reduce Government debt.
“With economic recovery so fragile we believe cutting duty at the Budget would better support the Government’s aim to reduce inflation, stimulate growth and maximise revenue to the Exchequer. The Government needs to listen and do the right thing.”
