Alcohol duty rises in the mix for UK Budget

Alcohol duty rises in the mix for UK Budget

The UK Government is preparing to raise duty tax on alcoholic drinks by another 5%, according to reports.

Ministers are considering a further hike on drinks, to be announced as part of the Coalition Government's Budget on 22 June, the Daily Telegraph reported at the weekend.

With value added tax also expected to rise to 20% from 17.5%, a further rise in duty would cause serious concern in the drinks trade.

Tax on wine and beer has already risen by 25%, including inflation, over the last two years, while tax on spirits has risen by just over 20% over the same period.

The Government is under pressure to force up drinks prices as part of efforts to tackle excess drinking, while the Treasury also needs to plug a hole in the country's finances following the global economic crisis.

More than a third of drinks industry leaders in the UK told just-drinks earlier this year that duty tax was their biggest concern.

Privately, most in the industry acknowledge that a tax freeze on 22 June is the best the sector can hope for.

In wine, there are growing calls for tax rises to be more effectively passed on to consumers.

"Consumers never really feel the increases and so nobody gets mad with the politicians," said Troy Christensen, president of Constellation Brands' wine business in Europe and Australia.

The UK Government has already signalled that it intends to legislate on drinks pricing and licensing.