UK Budget introduces sugar tax

The UK government has introduced a tax on soft drinks of 18 pence (if more than 5g content per 100ml) and 25 pence per litre (if more than 8g per 100ml) as part of its recent Budget 2017 but has made no change to its ongoing schedule of alcohol duties for beer, wine and spirits to rise with inflation.

Reaction from the UK drinks industry was not slow to surface with the Wine & Spirit Trade Association’s Chief Executive Miles Beale stating that the Chancellor had “increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses”.

He pointed out that after a freeze in wine duty in the 2015 Budget, wine duty income increased by £136 million (up 3.6%) the following year and after a 2% cut in spirits duty that year, spirits duty income increased by £124 million (up 4.1%) over the same period.

He described the 2017 Budget as a “missing opportunity to back British business and help out struggling consumers. The added uncertainty of another Budget in six months’ time is unwelcome and will further undermine business – and consumer confidence”.

With UK inflation currently at 3.9% last Monday saw the duty only on a bottle of wine increase by 8 pence to £2.16 while that on a bottle of sparkling wine went up by 10 pence to £2.77. Duty on a bottle of fortified wine increased by 11p to £2.89 while that on a 70cl bottle of vodka at 37.5%ABV increased by 28 pence to £7.54. Duty on a litre bottle went up by 40 pence to £10.78 and duty on a bottle of gin at 40%ABV rose by 30 pence to £8.05 while that on a litre bottle went up 43 pence to £11.50.

The Government will also introduce a ‘consultation’ on a new duty band for still wine and made wine between 5.5% and 8.5%ABV.

VAT at 20% is also added to the increase, pointed out Miles Beale.

The inflationary 3.9% increase in duty will cost the beer industry another £130 million or 2p a pint.

However the Budget offered £1,000 in rates relief for all pubs with a rateable value less than £100,000.

“We campaigned very hard for this and it’s vital that this is extended in future years,” commented the British Beer & Pubs Association’s Chief Executive Brigid Simmonds, “We’ve been very clear with Government that pubs are paying 2.8% of Business Rates but only generate 0.5% of turnover – an overpayment of £500 million. This very specific acknowledgement that pubs are so important to local communities and are a force for good, is very welcome.”

She too was critical of the rise in beer duty and its effect on pubs, pointing out that, “Beer tax has now risen by 43% in the past 10 years. This latest rise will mean 4,000 fewer jobs this year, mostly in pubs. Tax rises on all alcohol will add £125 million to the cost base of pubs.

“Britain’s beer taxes are three times the EU average and an astonishing 13 times higher than those of the largest producer, Germany. If we’re to compete in the future and as we move towards the challenges of Brexit, action must be taken on tax to ease the burden on a beer and pub industry that supports around 900,000 UK jobs.”

Elsewhere the Chancellor was accused of hypocrisy by Diageo GB, Ireland and France’s new General Manager Charles Ireland.

“It’s staggering” he said, “that the Prime Minister stood up in Scotland only on Friday and said that Scotch Whisky is ‘a truly great Scottish and British industry… and directly supports tens of thousands of jobs’ and just five days later her Chancellor hammers this industry at home.”

Tax on Scotch is now so high, he said, that nearly 80% of the price of an average bottle will go straight to the Government.

“We believe this duty rate increase will reduce total tax revenue,” he concluded and called on the Government to “reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system”.





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