Taxing times

We are reliving the disastrous taxation regime of the late 18th and early 19th centuries – the very one one which created the whisky smuggler

WHO WOULD be a customs man? Nothing in my research could provide me with a favourable answer to that question.  They had no resources, were undermanned, demoralised, badly paid, liable to be abused, even murdered.

Maybe life was tougher in the 18th and early 19th centuries, jobs harder to come by.  Not that I had much sympathy with the men who had the thankless task of trying to stop the flood of whisky being smuggled out of the Highlands before 1823.

Like most hopeless romantics, I’ve always tended to side with the smugglers.  After all, they only did it because of an iniquitous tax system.  Getting one over on the "gaugers" was all just part of an elaborate, if often deadly, game of chance.

Today though, the news that the EU is threatening to sue Customs & Excise for allegedly acting more like, well, Customs of Excess has made me revise that opinion.  The EU line is that the punishments which C&E has been imposing on people – fines and the seizure of vehicles – are "disproportionate."

As they said: "We are looking forward to the UK authorities clarifying precisely how they are going to change their practices regarding penalties on people bringing in large quantities of alcohol… and selling it on a no-profit basis to friends and family."

By the way, this is, as far as I can remember, the first time I’ve ever heard that you are allowed to sell the stuff when you get it back.  This leaves C&E in a tight spot. The EU law (which the government accepts) states that any of us can bring back as much drink as we wish as long as it is for personal use.

Placing any restrictions on this would be in breach of the free movement of goods across the borders of member states.  The government, however, is instructing C&E to catch as many bootleggers as it can, citing the enormous losses in revenue which occur every year as a result of the white van trade.

Yet the number of customs officers has fallen, they have fewer resources and there’s no sign of the volume of bootlegged liquor falling. Sound familiar? It ought to.  We are reliving the disastrous taxation regime of the late 18th and early 19th centuries – the very one which created the whisky smuggler.

The problem doesn’t lie with the allegedly excessive 21st century "gauger", it lies with an intransigent government which refuses to bring the UK into line with EU norms and whose line affects all of the drinks industry.  High taxation encourages smuggling. Fact.  Even the government accepts this.

Four years ago, a treasury committee reported that, "Although it is not disputed that reducing excise duty rates would stop the notorious white van trade in smuggled alcohol and tobacco, it is less clear that this course would affect large-scale smuggling, which appears to be the major problem."  For large-scale smuggling read drugs. 

If further proof were needed, look at what’s happened since Denmark slashed its duty rates by 45%.  Tax revenue hasn’t fallen because the Danes who went to Germany to stock up on cheap booze now stay at home.

Norway, meanwhile, has complained that smuggling from Denmark has now reached epidemic proportions.  Yet still the UK government won’t act. Revenue: that’s what matters. The government won’t change its stance because drink is a soft target.

There’s even less chance of a cut taking place given the febrile atmosphere which currently surrounds alcohol.  According to that same report, "health policy" also impacts on duty rates.  That used to mean tobacco. Today, it includes drink.

Retailers are in the front line. Take just one example: wine merchants used to rely on the wedding season for a much welcome boost to often slow summer sales.  No longer. Punters may hire glasses from them, but then they nip across the Channel for the booze.  Wholesalers feel the pinch also. 

Many of the clubs in the southeast sell bootlegged beer – and so the ripples spread across the trade.  The ridiculous thing about this is that everyone loses out – including the government and all the services it hopes to fund through duty income.

This means a concerted push is needed – and this includes wine writers, agents and suppliers alike.  Recently a fellow drinks journalist wrote in one paper how wine in Britain was actually too low in price; then two weeks later in another title he wrote a guide to buying wine in Calais!

We also need to support C&E. Any hampering of its ability to stop bootlegging as a result of this court case will be bad news for the whole of the drinks trade.  But our support must come at a price: it must be in exchange for the government acknowledging that its logic is seriously flawed.