UK budget sees alcohol prices increase

21 March, 2012

UK: The Chancellor has added another 41p to a bottle of spirits and 11p to a bottle of wine in the latest Budget.

The Scotch Whsky Association (SWA) said the 5% increase in spirits duty penalises the scotch whisky industry and consumers and undermines the growth agenda for the UK economy.

The Wine and Spirit Trade Association (WSTA) said the tax increase adds to the pressure on a sector which has seen “volume sales continue to decline in the past year as consumers reined in spending”.

The WSTA said the rate of alcohol taxation in the UK is now “so out of step” with our European neighbours that visitors to the London Olympics “will face paying 50 per cent more for an average bottle of wine (£4.89) than if the Games were being held in Paris (£3.26) and triple what they would pay in Madrid (£1.52)”.

The WSTA outlined these figures: 

"Duty and VAT already account for three quarters of the average price of a bottle of spirits and half the price of a bottle of wine.  The latest duty rise equates to:

 11p more on a 75cl bottle of wine;

 41p more on a 70cl bottle of spirits at 37.5% abv; and 

 3p more on a pint of beer."

These forecast price increases include VAT.

The tax increase comes into effect from 00.01 on Monday 26 March.

The Chancellor also referenced the Government's imminent alcohol strategy but did not refer specifically to any proposed measures it may contain.

WSTA interim chief executive Gavin Partington said: "Today's Budget puts Britain on course for an Olympic record that gives no cause for celebration.

"Consumers and businesses are already paying the price for the excessive duty increases in recent years and today's news means more price rises are on the way.

"Whilst we recognise the pressure on the public finances, the mounting duty burden on the sector is holding it back from contributing fully to the UK's economic recovery."

The Chancellor decided to continue the alcohol tax escalator, which automatically increases tax on alcohol by two per cent above inflation.

Gavin Hewitt, chief executive of the SWA said: “The reduction in corporation tax is a welcome boost to business but by maintaining the duty escalator the Chancellor has undermined the Government’s objectives of encouraging economic growth and curbing inflation.

“The Government needs to review the duty escalator which is harming the Scotch Whisky sector. The industry is vital to economic growth and supports about 35,000 jobs across the UK. It suffers at home due to the discriminatory tax regime applied by our own government.”

The SWA is calling for an overhaul of the entire duty regime through a move towards a system where all drinks are taxed at about the same rate. According to the SWA, scotch whisky currently carries 37% more duty per unit than beer and is 30% higher than wine. A statement from the SWA said:"Duty approximation would deliver an additional £1 billion a year to the Government to help reduce the national deficit."

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