Double-digit tax rise ‘penalises’ alcohol sector

The Scotch Whisky Association (SWA) has joined forces with two trade bodies to call on the UK chancellor to cancel the double-digit tax hike for beer, wine and spirits.

The government had previously pledged in its ‘mini-budget’ on 23 September to freeze duty on beer, wine and spirits from February 2023.

However, on 17 October, the UK’s new chancellor Jeremy Hunt cancelled the planned freeze on alcohol tax in an “extremely disappointing” move for the drinks trade. The U-turn is expected to save the government £600 million (US$677m) a year.

The SWA has partnered with the Wine and Spirit Trade Association (WSTA) and the British Beer and Pub Association (BBPA) to issue a joint call to return to a freeze on alcohol duty.

In a joint statement, the organisations said it had welcomed the duty freeze announced last month.

“It underpinned the investment our member companies are making across the UK, supported hundreds of thousands of jobs, and gave our industries stability and confidence at a time of rising energy costs, Covid recovery, supply chain pressures and fragile consumer confidence,” the statement said.

The groups said the U-turn had “shaken” stability, and will result in a double-digit tax rise for the beer, wine and spirits sectors, which collectively provide £13 billion (US$14.4bn) to the Exchequer through duty.

The move will also lead to a “significant increase” on alcohol prices for consumers, which comes at a time when the on-trade and retailers are dealing with rising costs and “keeping their doors from shutting for good this winter”, the trade bodies warned.

“It is vital that a drink with family and friends, in pubs and hospitality venues serving their communities in every part of the UK, does not become an unaffordable luxury,” the statement added.

“Over the past five years, during a stable period for alcohol duty, revenue has increased by 18%. In 2017, the Office for Budget Responsibility forecast that revenue would increase by just 13% over the same period. Despite the challenges of Brexit, punitory tariffs and a global pandemic, our sectors have continued to deliver increased revenue to the Exchequer because of, not despite, duty freezes.

“Now is the time to support our industries – not let us pay the price for ‘going too far, too fast’ in other fiscal measure.”

The trade groups called on the government to “support, not penalise our industries” and protect jobs.

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Author: Nicola Carruthers