Outraged wine industry commentators say UK wine lovers are being driven to buy abroad by the Treasury's punishing taxes.
Wednesday’s Budget hit the wine trade with an additional £0.04 duty on a bottle of wine or fortified wine, taking the tax burden to £1.20 (€1.74) a bottle.
In contrast, duty on a bottle of wine bought in France is £0.02 (€0.03) with £0.04 (€0.06) on sparkling wine.
Industry bodies warned that the rise, which at 3.5% is 50% above the rate of inflation, would lead already disgruntled drinkers to seek out bargains by buying in bulk from overseas.
‘It is scandalous that duty on still wine has been increased by 3.5% when the British drinks industry has suffered so much from cross-border shopping, smuggling and fraud,’ Jo Williamson, chairman of the Wine & Spirit Association said.
Williamson claims one in six bottles of wine drunk in the UK is already purchased abroad, mainly in Calais on the north coast of France.
UK supermarkets Tesco and Sainsbury’s, and retailer Majestic, already operate in France. ‘More UK supermarkets are thinking of going there, exporting more jobs to the Continent,’ deputy chair Joanna Delaforce added.
Champagne merchants had reason to celebrate, however, as the duty on sparkling wine remained unchanged. The £0.50 (€0.72) per bottle surcharge, which the industry has been campaigning to have abolished, was reduced to £0.46 (€0.67), though this was not enough to win over Delaforce.
‘A huge quantity of sparkling wine is already bought on the Continent,’ she said. ‘I know of wine merchants who have not taken any orders for sparkling wines for weddings for two or three years because it is so much cheaper to buy it abroad.’
Beer was hit with a £0.01 per pint increase, roughly equivalent to the 3.5% hike on wine duty. Tax levels on spirits were frozen for the sixth year running.
There was some relief for wine importers and sellers in the on-trade sector, where the Chancellor doubled the tax exemption for employers paying for Christmas parties. Companies will now be able to reclaim tax on spending of up to £150 (€217.50) a head, encouraging employers to increase both the quality and quantity of wine bought on such occasions.
Written by Guy Woodward10 April 2003