UK: WSA attacks Budget duty increase on wine
The UK Chancellor has announced his budget this afternoon. In Parliament, Gordon Brown said that duty on a pint of beer would rise by 1p. The duty on a bottle of wine will go up by 4p, but is frozen on cider sparkling wine and spirits.
In a statement, the Wine and Spirit Association attacked the wine duty rise. "Once again, the Chancellor is masking the blow dealt to the wine industry behind the seemingly innocuous face of an inflationary rise of 4p on a bottle of wine," said the association's director, Quentin Rappoport. "Increases in line with inflation, however small, have an impact on the growth rate of the wine sector."
"However," Rappoport added, "We are delighted that the Chancellor has today further reduced the unjust and unjustifiable tax surcharge on sparkling wine. For over a century the 'bubble tax' has discriminated against sparkling wine on the grounds of it being a luxury product, which is clearly no longer the case. Whether own label Cava or vintage Champagne, it is high time that it was on a level with still wine duty. There is exceptional English sparkling wine currently being produced, and this will no doubt help the development of this budding sector.
"We are also pleased with another successive freeze on spirits duty, as promised in last year's Budget Statement. It remains to be seen how the proposed strip stamp regime will be implemented and we continue to work behind the scenes with Government to protect the interests of the trade."
Meanwhile, Adrian McKeon, managing director of Allied Domecq Wines UK, called for retailers to pass on the new duty increases to consumers. "Excise is a consumer tax, and should be treated as such by the trade. A 4p per bottle rise may seem innocuous, but after three years of the same inflationary rises, producers' margins are being squeezed ever-tighter due to the stranglehold of price points.
"Furthermore, the administrative burden of the tax rise is huge for producers and retailers alike, so it's in both our interests that the consumer pays rather than the trade taking the hit once again," he said.
McKeon added: "I'm also disappointed that the Chancellor hasn't taken the leap to abolish the sparkling wine surcharge once and for all. It's a totally unjustifiable tax and should be brought into line with still wine rates as a matter of urgency. I had hoped that he might consider an impending general election as the ideal opportunity to get corks popping but sadly we have nothing to celebrate in this Budget."
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