Chancellor hits UK wine trade with 3.9% inflationary rise on duty
Duty on wine in the UK is to increase in line with inflation, despite the trade urging the government to slash the rate by 2%.
In his first budget, the Chancellor of the Exchequer Philip Hammond announced that there would be no such cut in duty, dashing the hopes of those in the sector who had been campaigning for it to be reduced. In reality he pushed through an inflationary rise on all alcoholic drinks, the first Chancellor to do so since Norman Lamont in 1992.
It means there is now a 3.9% increase plus 20% for VAT. It means an additional 8p in duty to a standard bottle of wine, 10p to a bottle of sparkling wine, 28p to a bottle of vodka, and 30p to a bottle of gin.
“It is disappointing that the Chancellor has failed to support a great British industry,” said chief executive of the Wine and Spirit Trade Association (WSTA) Miles Beale.
“He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.”
Before the budget, the WSTA had been urging the government not to “punish” wine drinkers with higher prices. UK consumers already pay the second highest rate of duty on wine and other alcoholic drinks in the EU, with £2.08 slapped onto every bottle of still wine, with VAT on top, meaning that 55% of the cost of the average bottle goes into the Chancellor’s coffers.
The WSTA warned that any increase in excise duty as well as the increase in import costs due to the devaluation of the pound and impending inflation would result in a “triple whammy” of price increases, denting consumer confidence.
Since the UK voted to leave the EU last June, and the subsequent drop in the value of the pound, he cost of importing wine has increased by 15%, according to the WSTA.
“This is a missed opportunity to back British business and help out struggling consumers,” said Beale.
The government is also to consult on a new duty band for still cider just below 7.5 per cent abv to target white ciders, and a new duty band for wine between 5.5 and 8.5 per cent abv.