Government policy to keep piling on taxes is benefiting no-one
Wine and spirit prices are set to rise again after another alcohol duty increase, announced at the Autumn Budget, comes into effect tomorrow (1st Feb).
The latest RPI tax hike, set at 3.66%, will mean duty on a bottle of wine at 14.5% abv, has gone up by £1.10 a bottle – since the new duty regime came in on Aug 1, 2023.
Similarly for spirits, nearly two thirds of the price of an averaged priced bottle of gin at 37.5% abv is tax, while duty alone in the same two and half year period has risen by £1.38.
Since the introduction of the UK’s new taxation system, duty on beer and spirits has risen by over 18%, for higher strength wines the increase has been even greater and duty has risen by over 49% on a 14.5% abv wine.
For a still wine at 14.5% the UK has now topped the tax table with the highest duty rate in Europe.
The Wine and Spirit Trade Association argues that the Government’s shortsighted decision to keep piling on taxes only perpetuates the economy’s “doom loop”.
History has shown that increases to duty lead to higher prices for consumers and reduction in sales, which in turn drains Treasury funds while fuelling inflation. For the financial year to date (Apr-Dec) total alcohol duty receipts are down 1.4%, spirits are down by the most at a massive 2.4%, beer is down 1.4%, and wine down 2%.
If alcohol receipts remain 1.4% lower for the last quarter of this financial year, total receipts are estimated to come in at around £12.4bn, which will be £180 million lower in 2025/26 than in 2024/25.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said:
“Despite the OBR at last acknowledging higher prices lead to a decline in receipts, the Government fails to recognise that its own policy is benefiting no-one.
For the nation’s wine and spirit sector the complexities of price changes, especially for wine which is now taxed by strength, mean more red tape headaches ahead. Add to this all the other costs including – NI contributions, business rates and waste packaging taxes – businesses have no choice but to increase prices in order to keep afloat, which unfortunately means consumers are going to take the hit once again.
The WSTA continues to call for Government to recognise the immense pressure consumers, retailers and hospitality are under and put a stop to the tax raids.”
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