WSTA: 'duty freeze only way to stop budget-busting price rises'
Ahead of the Autumn Statement on Wednesday 22 November, the WSTA urged Chancellor Jeremy Hunt to freeze alcohol duty until the end of the parliamentary year in a bid to prevent further price increases on wine and spirits.
The association estimated if Hunt raised duty by RPI, currently 8.9%, when added to the increases on 1 August this would result in cumulative excise duty increases of 68p on a bottle of wine, £1.50 on a bottle of spirits and £1.67 on a bottle of port.
WSTA chief executive Miles Beale said: “We are calling for a freeze for the remainder of this Parliament to prevent budget busting price rises.
“Consumers are still in the grip of a cost of living-of-living crisis and cannot afford to keep stretching their budgets just to be able to enjoy some of life’s little luxuries.
“Wine and spirit businesses need a breathing space to stay afloat in the current economic climate, which continues to combine lethargic growth with persistently high inflation.”
Reduced sales
Moreover, the duty hike would mean the Chancellor has announced a 30% increase in wine duty and 20% increase in spirit duty in the space of six months, according to the WSTA.
Figures from the Office for National Statistics revealed as of September this year the average price of a bottle of red wine was £7.72 while a bottle of vodka was up 14% year-on-year, costing £16.80.
Gin had also seen year-on-year upswings, rising by 10% to £17.01 and fortified wine was up 17%, costing £11.53 on average, according to the data from ONS.
However, the association asserted the numbers did not include the full impact of the August duty rises, which introduced alcohol being taxed by strength, adding the average price of a bottle of red wine could exceed £8 for the first time.
Gin or vodka were also predicted to increase if further duty hikes were implemented, potentially exceeding £18 for the first time.
“In August the Treasury introduced the largest alcohol tax hike for almost 50 years adding over 10% duty increase for spirits and over 20% increase for 4 out of 5 wines of all wine sold in the UK.
“A further rise would make a mockery of the Government’s priority is to cut inflation as further prices rises will lead to reduced sales and less revenue to the Exchequer”, Beal continued.
Elsewhere in the sector, Night Time Economy Adviser for Greater Manchester Sacha Lord urged Hunt to extend business rates relief as part of the statement, adding it had been a “lifesaver” for many firms.
Serious discussions
However, as reported in The Times, the Chancellor is understood to have decided against freezing rates for larger retailers in a bid to prioritise corporate tax reliefs that promote investment.
The Times reported Whitehall sources had detailed Hunt was still considering freezes for smaller businesses, but that business rates bills for larger firms could rise by some 6.7% in the spring.
Lord said: "With it now becoming increasingly likely that the freeze will not be extended beyond March 2024, I urge the Treasury to continue in serious discussions regarding a package of specific support specific for the sector.
“While the industry does not want to live by sustained ongoing handouts, it is still in recovery from the devastations of the pandemic and as such needs steady foundations to build on.”
This comes as a recent snap poll conducted by The Morning Advertiser revealed 60% of operators would find a reduction in VAT most beneficial in the statement, while 21% wanted to see an extension to business rates relief and 7% called for a reduction in beer duty.
Lord added: “As the fifth largest industry in the UK and a significant contributor to the country’s economic growth, we have to acknowledge without steady footing, growth and profitability of the sector will be severely impeded."
