Alcohol duty increase ‘historic blow’ to wine and whisky industry

Chancellor Jeremy Hunt signals end of blanket alcohol duty freeze, which will send levies – and prices – soaring

The price of a bottle of wine could increase by 44p from this summer after the chancellor opted to freeze taxes on beer but signalled punishing increases for wine and whisky.

Jeremy Hunt promised a “Brexit pubs guarantee” in his budget, with the discount rising from 5% to 9.2%, although the chancellor offered scant detail on a longer-term pledge of a “Brexit pub guarantee”.

The duty cut will shave 11p off draught beer compared with beer sold in supermarkets. “British ale is warm but the duty on a pint is frozen,” the chancellor quipped.

Wine and whisky producers failed to see the funny side as they were left reeling by a double-whammy of soaring duties, warning the chancellor’s plans would “stifle British business”.

A blanket alcohol duty freeze will end on 1 August, meaning levies will rise in line with inflation at 10.1%. The effect on prices will be coupled with increased duty on higher strength drinks planned as part of reforms of alcohol duty unveiled in 2021.

This will mean a 44p increase in the price of a bottle of wine with an ABV of more than 12.5%, according to the Wine & Spirits Trade Association (WSTA), while a bottle of vodka could rise by 76p and port lovers will be £1.30 out of pocket per bottle.

A smaller number of drinks will go down in price, including 14p off a 5% pre-mixed can of G&T and 7p off sparkling wine at 12%, while the government has said there will be transitional arrangements for the hardest-hit products.

Nevertheless, the WSTA chief executive, Miles Beale, warned that the “crippling” rises in the price of most drinks would further fuel inflation.

“It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.”

Wine importer Daniel Lambert said the overall impact would be less revenue for the Treasury from wine sales.

Quite simply this is the problem when you let people that don’t drink get control. This level of tax increase will REDUCE the overall yield for government tax receipts for wine. So it’s bad for the consumer, bad for business, bad for inflation and bad for government.

— Daniel Lambert (Wines). 🇪🇺🇫🇷🏴󠁧󠁢󠁷󠁬󠁳󠁿🍇🥂 (@DanielLambert29) March 15, 2023

The Scottish Whisky Association said inflationary duty increase would deal a “historic blow” to the industry.

“We have been clear with the UK government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way,” said the SWA chief executive, Mark Kent.

Kent issued a rallying cry to Scotch-loving MPs to “reject” the rise, adding: “This tax hike just adds to the pressures on the sector and breaks the UK government’s commitment to support Scotch.”

While Hunt failed to win over wine and spirits firms, he avoided a repeat of the beer blunder made by then chancellor Rishi Sunak and prime minister Boris Johnson in 2021, when draught relief on beer was first announced.

During a photocall to promote the cut, the pair posed with 30-litre kegs that were not, at the time, eligible for the relief.

Contributor

Rob Davies

The GuardianTramp

Related Content

Article image
From pensions to pools: what to expect from Hunt’s spring budget
Biggest change to welfare system in a decade and extension of energy price guarantee among expected measures

Phillip Inman

15, Mar, 2023 @6:00 AM

Article image
Budget 2015: Scotch whisky lobby pushes for duty cuts
Industry blames excessive tax and duty for 5% fall in domestic sales last year and worst export figures for 25 years

Severin Carrell Scotland correspondent

13, Mar, 2015 @10:30 AM

Article image
Jeremy Hunt aims to spur business investment with ‘full expensing’ tax break
Measure over next three years will allow firms to write off costs of IT equipment and machinery against tax on profits

Anna Isaac and Julia Kollewe

15, Mar, 2023 @6:35 PM

Article image
Jeremy Hunt’s 2023 budget: five things to look out for
The chancellor is unlikely to make giveaways next week, but he could offer more help with energy bills

Larry Elliott Economics editor

06, Mar, 2023 @3:06 PM

Article image
‘So many working parents are screwed’: mothers on Britain’s childcare costs
Parents describe plight as pressure builds on Jeremy Hunt to provide help in the budget

Jedidajah Otte

14, Mar, 2023 @2:00 PM

Article image
‘Complex’ post-Brexit tax rules means price rises for UK wine drinkers
Wine Society describes planned alcohol duty changes as ‘ludicrous, expensive and probably unworkable’

Jack Simpson

17, Mar, 2024 @3:00 PM

Article image
‘This won’t stop nurseries going bust’ – mothers and staff react to extra childcare support
Nursery providers question the funding while parents wonder why they have to wait years to access help

Sarah Marsh

15, Mar, 2023 @4:24 PM

Article image
Budget pension shake-up is £4bn tax giveaway for wealthy, critics say
Jeremy Hunt criticised for scrapping lifetime allowance and increasing annual contribution cap

Rupert Jones

15, Mar, 2023 @6:31 PM

Article image
UK economy will take more than a year to recover to pre-Covid level, says OBR
Jeremy Hunt’s efforts to boost growth unlikely to prevent largest fall in living standards on record

Phillip Inman and Anna Isaac

15, Mar, 2023 @6:18 PM

Article image
Jeremy Hunt makes U-turn on planned cut to energy support
Campaigners unite with suppliers to call on ministers to give long-term help to struggling households

Alex Lawson Energy correspondent

15, Mar, 2023 @6:33 PM