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Government Urged by WSTA to Abandon Alcohol Tax Increases

Government Urged by WSTA to Abandon Alcohol Tax Increases Abandon, alcohol, Government, Increases, scrap, Tax, tax hikes, urged, WSTA Food and Beverage Business

The Wine and Spirit Trade Association (WSTA) has expressed concerns over the government’s fiscal policies, stating that they have failed to control inflation. This apprehension is compounded by the upcoming increase in wine duty, set to rise by 20%, and spirits duty, expected to increase by over 10%.

Instead of taking measures to combat inflation, the Treasury is proceeding with plans to introduce the most significant alcohol duty hikes in nearly half a century. This decision further exacerbates the cost-of-living crisis when interest rates are at their highest since 2008.

It is not too late for the government to reconsider these detrimental duty increases and provide relief to wine and spirit businesses as well as consumers.

Effective August, all alcoholic beverages will be taxed based on their strength. Consequently, certain higher ABV wines from hotter countries may vanish from supermarket shelves in the UK. In addition to limiting consumer choices, these duty hikes will result in price increases for 90% of wines sold in the UK.

Spirits face a similar predicament, as premium products like gin, vodka, and whisky must adhere to the minimum strength stipulated by law.

Miles Beale, CEO of the Wine and Spirit Trade Association, emphasized the challenging times ahead for wine and spirit businesses. They will contend with tax hikes, rising costs of living for their consumers, persistently high inflation (especially for food and drink), and soaring prices for glass. This leaves little room for many businesses, particularly SMEs, to turn a profit. Unfortunately, some may not manage to stay afloat amidst this pressure.

Despite these difficulties, there is still an opportunity to reverse these crippling duty hikes.

The revisions to wine duty proposed by Sunak-Hunt will ultimately reduce consumer options and prompt price hikes. For spirits, consumers can expect an increase of at least £1 per bottle of gin or vodka and a surge of £1 per bottle of wine when duty is raised by 20% (+VAT).

Wine and spirit businesses are actively seeking ways to ensure their products remain affordable. However, there is no quick fix, with numerous tax and cost increases and limited options, particularly for wine and full-strength premium spirits where reducing ABV is not a viable solution.

Sir Graham Brady, Chair of the 1922 Committee and Chair of the All-Party Parliamentary Group (APPG) for Wine and Spirits, stressed the importance of not taking Britain’s position as a global hub for the wine trade for granted. The imposed duty increases will inflict self-inflicted damage on the sector, leading to significant bureaucratic challenges for SMEs, potential job losses, and increased costs for consumers.

Kathy Caton, co-founder of Brighton Gin, acknowledges the necessity of paying taxes but calls for a fair approach. She argues that exorbitant duty costs hinder the growth of businesses like hers. Instead of creating obstacles, the government should be promoting and supporting ‘Brand Britain’ and providing assistance to an industry that was previously thriving.

This situation is equally unjust for consumers, who should not face higher prices for their favorite drinks, especially as the cost of living and inflation crises increasingly strain household budgets.

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