2% alcohol duty cut could give budget £1.5bn boost

By Melodie Michel contact

- Last updated on GMT

Staff at The Punch Tavern on Fleet Street wore George Osborne masks for the launch of the campaign today
Staff at The Punch Tavern on Fleet Street wore George Osborne masks for the launch of the campaign today

Related tags: Tax

A 2 per cent alcohol duty cut could boost public finances by £1.5bn in 2015, according to an Ernst & Young report launched alongside the Wine and Spirit Trade Association’s (WSTA) ‘Drop the Duty’ campaign.

The WSTA and the Scotch Whisky Association (SWA), supported by the TaxPayers Alliance, are calling for consumers to write to their MPs in support of the cut, which campaigners want to see announced at the next UK Budget in March 2015.

According to the report, the extra money would come from increased investment in the industry, greater tax income from corporation tax and VAT, and from the benefits of jobs created across the supply chain and in pubs, bars and restaurants.

80 per cent tax

The organisations explained that UK consumers currently pay nearly 80 per cent tax on an average priced bottle of spirits and almost 60 per cent on an average priced bottle of wine.

On a category basis, that means 78 per cent or £10.06 on an average bottle of whisky; 79 per cent tax or £10.03 on gin; 76 per cent or £9.48 on vodka; and 56 per cent or £2.93 on a bottle of wine.

Miles Beale, chief executive of the WSTA, said: “By cutting the duty on wine and spirits at the next Budget the Chancellor would provide welcome relief for the British public, boost jobs and growth and generate an additional £1.5bn for the public finances. 

“It is important that the Chancellor hears this message directly from consumers so I am encouraging all our supporters to make their voice heard by joining the ‘Drop the Duty!’ campaign and emailing their MP at www.droptheduty.co.uk​ .”

Contribution to the economy

The report also found that a 2 per cent duty cut would increase the wine and spirits industry’s contribution to economic activity by £3.9bn (from £46.6bn to £50.4bn), to the UK’s GDP by 0.9bn (from £11.8bn to £12.7bn).

The wine and spirit industry directly or indirectly supports around 518,000 jobs in the UK in 2014, with 69 per cent directly dependent on the industry’s activity, the campaigners added.

 “If you buy a bottle of Scotch Whisky to celebrate Christmas and New Year, nearly 80 per cent of the average price you pay goes straight to the government.  This is unfair on both consumers and the Scotch Whisky industry. We are calling for George Osborne to do the right thing and cut excise duty by 2 per cent in next year’s Budget,” David Frost, chief executive of the Scotch Whisky Association, pointed out.

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