Budget: PPSs hit by 65 per cent duty rise

The trade has attacked Gordon Brown's decision to increase duty on premium packaged spirits (PPSs) by 65 per cent - a rise of 12p per 275ml bottle.

Mr Brown said PPSs would now be taxed as a spirit and not as a wine, as had been the case in the past.

But Quentin Rappoport, director of the Wine and Spirit Association, said taxing PPSs as a spirit was unfair and was effectively "taxing British innovation and success".

He added: "These products compete with beer so putting the duty on a level with spirits is unfair and will backfire. Producers will switch to basing their products on beer or wine rather than spirits, so no revenue will be gained.

"The drinks sector has seen tremendous growth and new product development and has been one of the few areas where the industry has thrived under sensible taxation levels."

The rise in duty on PPSs came as a surprise to the trade. Several years ago it was rumoured tax would rise in response to allegations that the drinks appealed to children.

But the trade responded by changing packaging and brand names to make it clear the drinks were aimed at adults, and had thought the danger of a duty rise had passed.

More on Budget 2002:​

• Chancellor accused of "conning" beer drinkers
• Small businesses boost from red tape cuts
• Responses from the trade

Related stories:​

Brewers hope for duty announcement in Budget speech (5 April 2002)

MPs back call for duty cut on small brewers' beers (20 March 2002)

Government confirms sliding scale of beer duty (1 March 2002)

Sussex microbrewer calls for sliding duty (1 February 2002)

Duty cut campaign gathers pace in run-up to budget (18 January 2002)