WSTA urges Darling not to increase alcohol tax

The Wine and Spirit Trade Association (WSTA) is urging Alistair Darling not to punish "the majority of responsible drinkers" by raising tax on alcohol in the Budget.

In its Budget submission to the Treasury, the group warns that raising tax on wines and spirits would increase the price consumers pay, while not addressing the problems of binge-drinking.

It also claims that such increases would actually reduce revenue for the Treasury and threaten more than 50,000 jobs.

Jeremy Beadles, Chief Executive of the WSTA said: "Raising the price of alcohol by raising taxes will unfairly punish the majority of responsible drinkers for the misdeeds of a small minority. Our research shows that any such increases will do little to address problem-drinking while hurting the economy and the Treasury. It simply does not make any sense."

Trade groups are concerned that the government will listen to health campaigners who are calling for tax on alcohol to be raised, which they claim will help address alcohol-related problems.

Last November the Alcohol Health Alliance, a body of 24 health and temperance groups, was set up and among its proposals was a 10 per cent increase in alcohol tax.

The WSTA's submission demonstrates with current tough market conditions and rising business costs any tax increase will mean the consumer will have to pay more:

• The price of a £3.99 bottle of wine would increase to £4.99 under a 30 per cent tax increase
• The price of a £3.99 bottle of wine would increase to £4.49 under a 10 per cent tax increase
• The price of a £14.99 bottle of spirits would increase to £17.49 under a 30 per cent tax increase
• The price of a £14.99 bottle of spirits would increase to £16.49 under a 10 per cent tax increase

At the same time, this research demonstrates that both the Treasury and the economy would suffer under any tax increase because of predicted loss of sales.

• Under a 10 per cent increase for both wine and spirits, the combined revenue loss from duty and VAT would be £102 million for wine and £92 million for spirits.
• Under a 10 per cent increase for both wine and spirits, the negative impact on the economy would be £1,572 million for wine and £1,262 million for spirits.
• These increases would also cause a loss of employment of 28,000 for the wine industry and 23,000 for the spirits industry.
• These increases would also have an inflationary impact during a time of increasing concern about inflation.

The economic analysis also shows that calls by the anti-alcohol lobby to increase taxes to address problem-drinking are unlikely to be effective:

• A 10 per cent increase in tax would lead to only a 1.9 percent reduction in the consumption of wine and a 4.8 percent reduction in the consumption of spirits.

Alistair Darling will make his debut Budget speech on March 12.