The UK drinks trade has reacted with relief to the freeze on alcohol tax in today’s emergency budget.
This is the first time in nearly a decade that excise duty on alcohol has been frozen – but relief was tempered with resignation at the much-anticipated hike in VAT from 17.5% to 20%, announced by Chancellor George Osborne in his first Budget following this year’s General Election.
The VAT rise will take effect from 4 January next year, but many in the drinks trade had been braced for another increase in excise duty following a series of rises in recent years.
‘Today’s announcement provides some relief for a sector that has faced substantial tax increases in recent years, and I welcome the Chancellor’s decision,’ said Jeremy Beadles, chief executive of the Wine & Spirit Trade Association (WSTA).
Since the beginning of 2008, the duty burden on wine and spirits has increased by 26% and 22% respectively, and this represents the first freeze on duty since 2001.
‘Repeated tax hikes have produced less revenue for the Treasury and punished responsible drinkers, while failing to tackle the problem of binge drinking,’ Beadles added.
Chris Sorek, chief executive of responsible drinking organisation Drinkaware, pointed out that supply and pricing were not the only factors influencing binge drinking.
‘To permanently change people’s relationship with alcohol, prevention and education must play a central role,’ he said.
Scotch Whisky Association chief executive Gavin Hewitt also welcomed the duty freeze, adding that he backed the Chancellor’s plans to review the duty system in the autumn.
The SWA believes it bears an unfairly high proportion of the duty burden when compared to wine and beer, and supports an excise system based on relative levels of alcohol.
Written by Richard Woodard