UK: Budget - WSTA claims beer duty escalator move could be illegal

By | 20 March 2013

The announcement in Parliament has caused controversy and joy in equal measure for the industry

The announcement in Parliament has caused controversy and joy in equal measure for the industry

The Wine & Spirit Trade Association has hit out at the UK Government's decision to scrap the duty escalator for beer and has claimed that the move may not be legal.

Chancellor George Osborne announced in the Budget today (20 March) he is cancelling the escalator on beer, but it would remain for other categories. Under the measure, duty has been raised by 2% above inflation each year since 2008.

But, WSTA chief executive Miles Beale said: “It makes little sense to single out beer, particularly as there is a legal precedent to suggest government is unable to do so.

“If this was designed as a measure to support pubs it seems misplaced: over 41% of drinks sold in pubs are wine and spirits, contributing GBP9.4bn per year."

The WSTA claims the escalator will add GBP0.10 to a bottle of wine and GBP0.53 to a 1-litre bottle of spirits.

Diageo also voiced its disapproval: "This move is disappointing. Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate," it said in a statement. "Scotch is the UK’s biggest food and drink export. This move risks that success."

Brewers, however, welcomed the Chancellor's plan. “This is absolutely brilliant news, and it will make George Osborne the toast of Britain’s pubs today," said BBPA chief executive Brigid Simmonds "By cutting the tax on beer, he has moved to boost jobs in Britain’s pubs at a time when it is most needed.”

Sectors: Beer & cider, Spirits, Wine

Companies: WSTA, Diageo

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