The wine duty tax freeze in the UK Budget for 2020 falls short of industry calls for a tax cut, but means that tax will not rise in-line with inflation.
Miles Beale, chief executive of the Wine & Spirit Trade Association (WSTA), called the move a victory and said that the wine trade would raise a toast to chancellor Rishi Sunak.
‘The decision to freeze wine and spirit duty is welcome for British business, pubs and the wider hospitality trade. While he has not cut duty, it is reassuring to see that in his first Budget as chancellor, Rishi Sunak MP has taken steps to address the UK’s excessively high duty rates.’
Joe Fattorini, spokesperson for campaign group Wine Drinkers UK, said, ‘The recognition by the Chancellor that wine is the nation’s favourite alcoholic drink and therefore shouldn’t be singled out for tax rises is welcome news for the 33 million wine fans in the UK.’
The WSTA had said that inflation increases in wine duty tax would have added six pence to the price of a bottle of still wine in the UK.
It had called for a 2% cut to wine and spirits duty tax.
Chancellor Sunak also announced duty tax has been frozen on beer, cider and spirits.
He used his first Budget Speech to single out Scotch whisky, which has faced 25% import tariffs in the US since 18 October, alongside certain European wines, as part of an aerospace industry dispute.
Sunak called Scotch whisky a ‘crucial industry’ and said, ‘We will continue to lobby the US government to remove these tariffs.’
This year’s Budget came against a backdrop of the spread of coronavirus, also known as COVID-19, which has led to fears of a global recession alongside concerns for public health.
Chancellor Rishi Sunak warned of short-term business disruption from the Covid-19 outbreak, but he said the economic impact would be temporary.
He announced a range of relief measures designed to help businesses cope with the extra financial strain.
‘Wine has been unfairly treated for too long’
Previous WSTA research has shown that the average price for a bottle of wine was set to surpass £6 in 2020 for the first time, according to 14 Members of the UK Parliament who wrote to the Treasury ahead of the Budget to push for a wine duty cut.
‘Duty on wine has increased significantly more than on spirits and beer over recent years – by 12% since the welcome decision to scrap the duty escalator in 2014, compared to 2% for spirits and a decrease of 0.2% for beer,’ said the MPs, who were part of the All-Party Parliamentary Wine and Spirit Group.
‘Wine has been unfairly treated for too long. The last time the sector received a cut to duty was 36 years ago under Chancellor Nigel Lawson and only then because of a Court Judgement.’
Many in the wine trade have also spoken of higher costs related to currency swings and Brexit planning in recent years, alongside duty tax rises.
If no trade deal between the EU and UK is reached by the end of the Brexit transition period, on 31 December 2020, then the wine trade may still face disruption at ports.
Around 55% of the UK’s wine imports come from the EU.