Cheap wines to bear brunt of pre-Budget tax cut, warns WSTA

The Wine and Spirit Trade Association (WSTA) says the combination of a cut in VAT and the rise in duty on alcohol, announced yesterday by the Chancellor, will push up the price of cheaper wines.

The WSTA calculates that at the newly increased duty rate, a £4 bottle of wine will rise in price to £4.05 and £5 bottle will rise to £5.03.

As a result, it says, four out of five shoppers will be paying more for their wine this Christmas.

According to their figures, the vast majority of consumers, 82%, buy wine costing £5 or less, meaning it is they who will bear the brunt of price hikes.

Jeremy Beadles, chief executive of the WSTA, said: "It is staggering that a government which claims to act in the interests of the many not the few wishes to punish ordinary hard-working consumers who wish to spend the little cash they have left on a drink.

"The Chancellor has turned into Santa Claws, snatching scarce pleasure from millions of people."

But whilst the Chancellor's decision to cut VAT rates from 17.5% to 15%, and raise excise duty rates by 8% may have a proportionately greater impact on lower priced products, the combined tax changes will have less of an impact on the price of more expensive wines, said the WSTA. It calculates that a £6 will rise to only £6.01 at the increased duty rate.

The move could even make some more expensive bottles cheaper than they currently are.

The tax changes, which come into force on December 1, have been met with sharp criticism by the drinks industry. It is likely to force renegotiation of arrangements between retailers and suppliers; while duty must be paid immediately, VAT is payable quarterly.

Beadles added: "This is a double whammy for the drinks business - tax changes wreaking havoc during the busy Christmas trading period and another hit to small business cashflow. This is not what I call helping the British economy."

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federicob said:

	The sad thing is that this 82% of consumers will continue to be forced to drink even cheaper, lower quality wines. The wine industry is experiencing rising costs and is no longer able to make a profit at the prices the Trade is willing to pay in order to keep retail prices down in spite of higher taxation.
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November 26, 2008
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BristolWine said:

When will our government realise that constantly increasing duty will never be the answer to creating an environment where people will drink responsibly and the binge drinking culture will be a thing of the past. The facts are that the vast majority of the British drinking public do drink responsibly. So why are they being penalized by constant rises in duty? Surely the answer lies in revisiting the licensing act. The situation is absurd in that virtually anybody can obtain a licence with the minimum of knowledge. No longer is there the requirement to prove need in a given area when applying for a licence as was the case before the current act. Councils are now in situations where areas in their boroughs are reaching saturation point concerning licensed premises. This is the case in both the on and off trade. The only body that can object it seems are the police and as we all know they are busy elsewhere. Alcohol should be sold in specialist outlets in the off trade that are permitted only to sell alcohol and wine related goods. Alcohol should not sit alongside magazines, comics, sweets and other household consumer products where younger members of the public are tempted to purchase. Supermarkets should be made to segregate totally their alcohol sales to dedicated stores with seperate staff and tills to manage their sales. Would this not be a more responsible approach to alcohol sales. We have a wine trade in Britain that is second to none in the global market in terms of variety and choice. Don,t let our government ruin it.

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November 27, 2008
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