The price of a bottle of wine could go up by nearly 45p in a potential tax raid on drinkers. A trade association chief executive has warned of a “two-pronged attack” from Chancellor Jeremy Hunt‘s Spring Budget, fearing he may announce a duty increase linked to inflation. This combined with a “stealth tax” already applied by the Government’s new alcohol duty regime has led some to argue the move will result in a “crippling blow” to the UK’s alcohol industry.
Alcohol duties are set to rise in line with inflation from August 1.
A new system for taxing alcohol is also expected come into force with about 90 percent of still wines set to see a rise in the amount they are taxed.
The new system, in general terms, will tax alcohol according to strength.
If the Chancellor announces the freeze to alcohol duty will also end on August 1 and chooses to increase duty by inflation, for example by 10 percent RPI, then wine drinkers will face a tax hike at least double that size.
A 20 percent tax rise will mean duty on a bottle of still wine will go up by a staggering 44p.
For fortified wines the duty rises will be even greater with port set to rise by £1.29 a bottle, according to the Wine and Spirit Trade Association (WSTA).
News of the possible rise comes amid fears pub landlords, brewers and distillers will be left with no choice but to pass the cost on through higher prices.
The WSTA says the alcohol duty increase for wine will be the steepest in over 50 years.
Miles Beale, Chief Executive of WSTA, said: “The UK’s 33 million wine drinkers are blissfully unaware that the price of wine is set to rocket this summer.”
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He added: “If the Chancellor goes ahead with a two-pronged attack on wine drinkers by adding an inflationary duty increase on top of the stealth tax already applied when the Government’s new alcohol duty regime kicks in this summer, duty alone will add 44p to a bottle of still wine.
“If alcohol duty rates went up by RPI, this will be a crippling blow to the UK alcohol industry and consumers who will have to pay the price for tax rises during a cost-of-living crisis.”
The WSTA says wine businesses have repeatedly raised their concerns with the Treasury that the new tax rates unfairly target wine drinkers and will make the UK market a less attractive place to sell wine.
It adds spirits are already the highest taxed alcoholic drink and these have received a 10 percent increase, adding a further 75p to a bottle of vodka.
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The British Beer and Pub Association (BBPA) has urged the Government to extend a lifeline to the sector.
It says 2,000 pubs could be at risk of closure without support in the Spring Budget.
The association is calling on the Chancellor to use the Budget to take account of the pressures pubs and breweries face.
It also wants Mr Hunt to freeze duty rates, implement a “significant” increase in the discount for draft beer sold in pubs, and to introduce a previously announced reduced rate for lower-strength beers from August 1.
It cites data from Oxford Economics which estimates on-trade beer sales will decline by nine percent in 2023/4.
This equates to one million fewer barrels of beer sold (288 million pints) and 25,000 potential job losses in pubs and the wider industry, according to the BBPA.
Chief Executive of the British Beer and Pub Association, Emma McClarkin, said: “It is crucial the Government shows in this budget that it understands the pressures the sector is facing and just how much our pubs and breweries mean to communities everywhere across the UK.
“We urgently need the Chancellor to deliver a plan for sustainable growth with fair, modernised tax rates and a focus on skills and training needed to ensure pubs and breweries can thrive.
“After almost three years of extremely tough trading conditions due to lockdowns, an energy crisis, supply chain disruptions and more, now is a make-or-break moment to save our locals and breweries from failure now in the years to come, we need the Government to act now or risk losing something very special forever.”
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