Spirits in the firing line

Spirits in the firing line

There is growing pressure from UK Government ministers for a significant hike in duty tax on spirits in the upcoming UK Budget, according to drinks industry leaders.

Tax on spirits could soar in the Budget, if those ministers lobbying for it win the argument with the Treasury, just-drinks understands.

"There is a lot of pressure from centre of Government to do something about price," a senior drinks industry source told just-drinks.

Pressure from certain key ministers has become more intense since the UK Parliament's Health Committee published a damning report on alcohol abuse in January. The Committee accused the Government of being too close to the drinks industry.

While a minimum price on drinks remains on the outskirts of Government thinking, just-drinks understands that there are calls for a show of force on duty, in order for the Government to show that it is taking a hard stance on the issue of alcohol misuse.

Alcohol has become a political football between the Government and the opposition, ahead of a General Election, which is expected in May.

A four-year "tax escalator" on alcohol means that duty tax on drink is set to rise by 2% above inflation in this year's Budget, expected to be announced at the end of March.

At current inflation, this would be an increase of 5%, but industry fears that the Government may go further on spirits in particular.

The Wine & Spirit Trade Association (WSTA) has called on members to petition chancellor Alistair Darling via its website, Drinkers' Alliance.

Tax on wine and beer has risen by around 20% in the last two years, with tax on spirits up 15% in that time. A further rise in the current economic climate will mean sector job losses, the WSTA has warned.

Figures contained in the Government's pre-Budget Report, released in December 2009, show that it expects to make GBP300m (US$470m) more than anticipated from alcohol tax in the fiscal year to the end of March.