UK government freezes duty on beer, spirits and cider – but wine duty to rise
However, duty rates on most wines and higher strength sparkling ciders will rise with inflation.
The changes were announced in yesterday’s Budget announcement, which also included a sugar tax on soft drinks.
Spirits
In its budget, the government refers to the Scotch whisky industry as ‘a great British success story.’ Exports are worth around £4bn ($5.8bn) a year, accounting for a fifth of UK food and drink exports. Freezing the duty rate on spirits will help support this industry, the government says.
The Scotch Whisky Association has welcomed the decision to freeze excise duty on spirits, but says a cut would have provided a bigger boost for the industry.
“As a result of today's freeze, tax - VAT and excise duty - remains at 76%, a level that three quarters of the British public believe is too high. The excise duty on a 70cl bottle of Scotch at the average price of £13 is £7.59 and the total tax burden is £9.91.”
Last year's 2% cut in excise helped boost revenue from spirits for the Treasury by £102m ($147m), says the Scotch Whisky Association, having argued for another cut this year to benefit public finances, the industry, and consumers.
Cider and beer
The duty rate on most ciders will be frozen to recognize the important role cider makers play in rural communities, the government says in its budget.
Meanwhile, duty rates on beer will be frozen in acknowledgement of the important role pubs play in local communities, including more than 19,000 jobs.
The British Beer and Pub Association’s chief executive Brigid Simmonds said: “This freeze means that beer duty is now 17% lower than it would have been, had the Chancellor stuck with the escalator policy.
“To achieve three cuts and a freeze from the Chancellor over four Budgets shows a real commitment and concern for both brewing - an important manufacturing industry - and pubs. Beer is already 20p cheaper in pubs than it would have been under the escalator and the industry has the confidence to invest.”
However, Simmonds noted that the UK still has the second highest beer tax in Europe.
Wine
The Wine and Spirit Trade Association has welcomed the freeze in spirits duty but says the wine industry has been treated unfairly.
It says wine drinkers will now pay an extra 3p, taking duty paid on an average bottle of wine up to £2.08. The increase will be imposed as of Sunday.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “We are pleased with the Chancellor’s decision to freeze spirits duty. However, we are disappointed that 30m wine consumers have been singled out for a duty rise and what’s more it is counterproductive.
“The freeze in wine duty in 2015 has resulted in £118m ($170m) extra in revenue to the Treasury in the last 10 months, up 4%. Wine was the only alcoholic drink not to receive a cut and netted the Chancellor the most - which makes it very unfair that wine has been penalised.
“We deeply regret that the Government has missed an important opportunity to support the emerging English wine industry: a real home-grown success story that needs nurturing rather than being hit by another unfair tax increase.
“The failure to re-balance this unfair tax burden on the wine industry will stifle the industry’s ability to invest, to sustain the 270,000 jobs it currently supports and to help British pubs, bars and restaurants where – at £4bn p.a.($5.8bn) - it makes a significant and fast growing contribution.”
