UK drinks trade condemns massive duty hike

The UK drinks trade’s fears have been confirmed in Chancellor Alistair Darling’s first budget, delivered at lunchtime today to the House of Commons. Duty increases will add four pence to the price of a pint of beer, 14 pence to the price of a bottle of wine, and 55 pence to the price of a bottle of spirits.

This sizeable tax hike on alcohol, which will come into effect from midnight on Sunday, means, in particular, that people in Britain will now pay more tax on wine than in any other European Union country.

Wine and Spirit Trade Association (WSTA) chief executive Jeremy Beadles said: "It is no cause for celebration that British consumers will now pay more tax on wine than anyone else in the European Union.

"It is bizarre at a time when the economy is slowing, prices are rising and many families are feeling the pinch that the Government should choose to add to their burden by making the simple pleasure of a glass of wine or spirits considerably more expensive.

"We are surprised that a Government which came to power promising to govern in the interests of the many now wishes to punish them. Our polling shows voters don’t support this."

Rob Hayward, chief executive of the British Beer & Pub Association (BBPA), said: “The millions of people who enjoy beer have just been hit by a £50.5 million a month tax raid on their family budgets. By aiming a tax hike at beer, the Chancellor is shooting himself in the foot. Treasury revenues will continue to fall, pubs will continue to close and beer sales sink further."

“Every single day, the Treasury is losing over £1 million in beer taxes and four pubs are closing. People are now drinking 1 million fewer pints a day compared with last year. That trend will continue. It’s a decision doomed to failure – bad for taxpayers, beer, pubs and bad for the Treasury as well."

Mike Benner, chief executive of The Campaign for Real Ale (CAMRA) said, "The Chancellor has failed to recognise that well-run community pubs are the solution to Britain’s binge drinking problems. This budget will do nothing to stop binge drinking, but it will lead to pub closures on a huge scale, widen the gap between supermarket and pub prices and encourage smuggling and cross-border shopping. It’s a great big nail whacked ruthlessly into the coffin of the British pub."

Gavin Hewitt, chief executive of the Scotch Whisky Association (SWA), said: “Scottish distillers are astonished by the Chancellor’s announcement. The government’s own figures show that any duty increase on whisky is likely to reduce revenue at a time when public finances are tight.

"A tax rise is a blow to international competitiveness when the industry has been investing significantly to meet growing global demand for Scotch Whisky. It sets a damaging precedent that export markets may follow.

Edwin Atkinson, director general of the Gin and Vodka Association (GVA) added: “The Chancellor cannot have it both ways. Either he wants more revenue or he wants to reduce consumption. For spirits, he cannot have both. And given the huge increases in production costs, this increase is even more concerning. We estimate that this increase in tax rate will reduce revenues by over £40m a year, not increase them."

Finally, Stephen Robertson, director general of the British Retail Consortium, noted: "We share the Government’s concerns on responsible drinking but are not convinced that raising the price of alcohol through taxation is the correct solution. The key issue is changing our culture and encouraging awareness of sensible drinking, a process retailers are committed to working with Government on as part of its alcohol strategy. The problem with taxation on alcohol is that it’s a blunt instrument that raises the price to millions of consumers who drink responsibly."

Duty increases:
• 14 pence per bottle of wine
• 18 pence per bottle of sparkling wine
• 55 pence per bottle of spirits
• 4 pence per pint of beer
• 3 pence per litre of cider
• 20p per bottle of fortified wine

These changes will come into effect from midnight on Sunday 16 March 2008