Decanter editor advises Parliament on wine duty
- Friday 27 February 2009
Prompted by the Wine and Spirit Trade Association (WSTA), the All-Party Parliamentary Wine and Spirit Group – comprising MPs and peers with an interest in the industry - convened to discuss the impact of perceived inequities in the Treasury’s approach to wine taxation.
A committee of six including Woodward quizzed various sectors of the trade, with the Decanter editor clarifying the issues for the Group.
Of particular concern is the Treasury’s imposition of a 17% increase in wine duty, including a hidden second duty increase in November that erased the much-hyped reduction in VAT. The Treasury also committed itself to a four-year, 2%-above-inflation tax escalator as of this year's budget in April.
The five witnesses - representatives from retail, import, distribution and production - expressed their angst over what they see as the Treasury's unfair approach to taxation. They detailed the resulting damage to the trade, which the WSTA claims has driven the industry to a 'tipping point'.
Tim How, ex-chief executive of high street retailer Majestic, said current market conditions were as tough as he had seen in his 20-year career, and lamented the lack of government support.
Simon Berry, chairman of Berry Bros & Rudd, said high taxes were 'the final nail in the coffin'. With market pressure causing retailers to reduce their ranges, said Berry, the policies are 'driving people to drink worse wine.'
Woodward said the witnesses made a compelling case for the Government to rethink its projected tax increase in this year’s budget.
'The back-door duty increase of November has been compounded not just by the financial downturn but also the weakness of the pound,' he said.
'As the trade relies on imports for 99% of its products, it is especially vulnerable. By keeping tax as it is, the Government could stimulate sales, help the trade and swell its coffers.'
The All-Party Group will submit a report to the government on 25 March. The WSTA hopes to secure a meeting with the Chancellor ahead of the budget, due 22 April.