Diageo calls for taxation shake-up

Drinks giant Diageo is calling for all drinks to be taxed at the same rate per unit of alcohol, regardless of whether they are beer, wine or spirits.

Responding to HM Treasury’s review of alcohol taxation and pricing, the UK-based multi-national has criticised Government plans to tackle so-called ‘problem drinks’ such as ‘alcopops’ or RTDs (ready-to-drink), and high-strength cider.

To bring the various duty levels into line, the company has suggested freezing spirits duty at its current level and using the current duty escalator (Retail Price Index plus 2%) to gradually adjust tax on the other drinks categories.

Diageo GB managing director Simon Litherland said the idea was the ‘fairest and most transparent’ way of approaching alcohol taxation.

‘Alcohol is alcohol and we believe that people should know they are paying the same tax per unit whether it is a pint of Guinness, a glass of Blossom Hill or a glass of Johnnie Walker,’ he said.

The new system would generate between £524m and £1.9bn a year for the Treasury, Diageo added, quoting analysis by Volterra Consulting.

But the company repeated its criticism of the Government’s plans to use taxation to penalise ‘problem drinks’ such as super-strength cider and RTDs.

Diageo said police figures showed beer, cider and wine were more likely to be chosen by binge or underage drinkers than RTDs.

‘The proposal to target a tax at RTDs is unfair, inconsistent and disproportionate to the problem,’ said Litherland.

‘Our solution is to tax all drinks according to their alcohol content. Such an approach will mean strong drinks with more alcohol in them pay more tax.’

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Written by Richard Woodard