Tax alcohol based on abv, says EU report

The chief executive of the Wine and Spirit Trade Association (WSTA) called a report into tackling alcohol harms in the EU “disappointing”, after it suggested taxing alcohol based on its abv.

A report published today by the House of Lords’ European Union Committee said the 2006 – 2012 EU strategy aimed at reducing alcohol-related harm had “achieved little”.

If a new strategy was to be introduced, the report said action should focus on measures the EU can take for itself, “rather than relying on Member State action alone.”

It comes at a time when consumption in the UK is at its lowest level in two decades. One in five UK adults now identify themselves as teetotal, a 2% increase on 2005, a change driven by young adults who are increasingly turning their backs on booze.

However the report said the rate of liver-deaths in the UK had nearly quadrupled over the last 40 years.

One recommendation made by the committee was to reform EU rules on alcohol taxation to allow variable tax rates based on alcoholic strength.

“Wine, unlike beer and spirits, is taxed in bands”, said the report. “There is a band at 7.5% and at 15%, so there is no financial incentive for manufacturers to make weaker wines, which, given the population-level link, would be much healthier”.

Responding to the recommendation Miles Beale, chief executive of the WSTA, said the report had failed to understand that wine is unique in having its alcohol content defined by the climate in its country of origin.

“To introduce an excise regime based on alcoholic strength would penalise wines from warmer climates, which produce higher strength wines, and would potentially be a barrier to trade, breaching EU and WTO rules. While the WSTA is strongly opposed to changing the single market’s current duty system for wine, which stands no chance of being agreed in Europe – a point conceded by the report – the WSTA has long called for changes to the definitions which would allow for lower or reduced alcohol wine below 8.5%. This is something the Committee’s report fails to recommend.”

Furthermore, the report also called for stricter labelling on alcoholic drinks to include, as a minimum, the strength, calorie content, guidelines on safe drinking levels, and a warning about the dangers of drinking when pregnant adding that “voluntary commitments are not enough.”

In the UK, significant progress has been made in terms of the Responsibility Deal pledge – an initiative spearheaded by The Portman Group and backed by Public Health England which has seen the industry remove one billion units of alcohol from the market.

WSTA cheif executive Miles Beale is pressuring the chancellor to make cuts to wine and spirits

Beale added: “It is disappointing that the report fails to give sufficient prominence to the significant and well recognised achievements in reducing alcohol harm here in the UK. The work the UK alcoholic drinks industry has gone further and achieved more than in the vast majority of other member states. In particular, its recommendations ignore the fantastic progress of the Responsibility Deal labelling pledge, which has seen pregnancy warnings, unit information and safer drinking guidelines placed voluntarily on 80% of alcohol labels.

“While we welcome some aspects of the report, including the recommendations to improve alcohol related research to support evidence based policy making, overall it is a missed opportunity. We would like to have seen the Committee recognise an important aspect of the original strategy was to facilitate best practice across EU member states. Something the UK is in a good position to lead on.”