Clamour for a 2% duty cut on alcohol amplifies

17 February, 2015

Retailers, wholesalers, producers and TV stars are throwing their weight behind the campaign to convince George Osborne to announce a 2% cut on wine duty in the next month’s Budget.

Research commissioned by the campaign’s leaders – the Wines and Spirit Trade Association and the Scotch Whisky Association – suggested that a 2% cut on alcohol duty would create 10,000 jobs across the UK.

Because it would allow more investment into the sector, the Ernst & Young report argued that a cut in duty would actually generate an extra £1.1 billion for the public purse in 2015.

Hal Wilson, managing director at regional chain Cambridge Wine Merchants, said: “We have enjoyed growth and expansion over the past 20 years and we are extremely proud to be part of the UK’s burgeoning wine industry. With 50 members of staff and eight retail centres, we are a significant local employer, but it has been extremely tough to prosper over the last five years, thanks to a punitive tax regime.

“A 2% cut in alcohol duty would help us get back to the levels of growth we experienced in the past and the benefits would be felt throughout the hospitality sector. We supply restaurants and gastropubs throughout the country, all of whom will flourish as a result of a drop in duty.

“Government attempts to reduce consumption have been better accomplished through stakeholder partnerships than by enforcing blanket increases in tax for everybody. We would love to see the Great British public enjoying our wines at a price that is fair for them.”

The UK is the sixth largest wine market globally, is worth £17.3 billion in economic activity to the British economy, supports nearly 270,000 jobs and directly contributes £8.7 billion to public finances annually, but the tax UK shoppers pay is completely disproportionate to other European countries and is hampering growth.

There are now almost 500 commercial vineyards operating in the UK, several of which are winning gold medals at international competitions and carving out a reputation for producing sparkling wine that gives Champagne a run for its money.

Frazer Thompson, chief executive at Chapel Down Winery, said: “We pride ourselves on being at the cutting edge of English wine production. We, and our army of new investors, are excited about the growth and potential of English wine as we see the quality improve year on year.

“However, the current level of alcohol duty in the UK is restrictive. We produced about a million bottles of still and sparkling wine last year, we are a significant employer and investor in Kent, and are making an ever growing and valuable economic contribution to the UK economy.

“Yet the current level of duty and tax we contribute to the exchequer – up to 45% per bottle in our case but 60% of the average priced bottle of wine in the UK– is out of all proportion to other EU countries. It is a significant limitation to our speed of growth and a dampener on investment that reduces the amount of money we can spend in expanding our facilities and employing more people.

“This is an important issue that stretches beyond our own production. It is felt by all those along the supply chain as well as those who consume our products. The government needs to recognise the growing importance of the English wine industry to enable greater sustainable growth and generate more jobs. This is why we are supporting the WSTA’s ‘Drop the Duty!’ campaign and calling for a 2% cut in alcohol duty.”

Richard Balfour-Lynn, producer at Hush Heath, which makes Balfour 1507, added: “Our vision is to create English pink sparkling wine to rival the finest from Champagne and the rest of the world.

“Our vineyards sit alongside our orchards and ancient woodlands and have received international awards and recognition thanks to the hard work of local people here in Kent. We are making a small, but growing economic contribution to the UK economy.

“However, the current level of alcohol duty in the UK is restrictive and reduces the amount of money we can reinvest into expanding the business and employing more people. The government needs to recognise the potential of the English wine industry to enable growth and generate jobs – in English wine, but also hospitality and tourism. A first cut in wine duty since 1984 would be a good start and a good signal to my business, my employees and my industry. That is why we are supporting the WSTA’s Drop the Duty campaign and calling for a modest 2% cut in alcohol duty.”

Peter Richards MW, wine expert of BBC’s Saturday Kitchen, believes the UK’s punitive tax regime is hurting British wine lovers.

“This is a really exciting time for wine producers in the UK,” he said. “The wine business is making a significant contribution to our economy – we have the sixth largest wine market in the world, and we have some brilliant winemakers making world-beating vintages.

“Such a punitive tax regime is limiting our ability to enjoy the fantastic wines that this country has to offer. It also acts as a brake on jobs, earnings and tax revenue from a growth sector in our local economy. We’re starting to make some amazing homegrown wine as well as artisan spirits, and we need to let this grow rather than strangling it with an unfair tax burden.

“A 2% drop in alcohol duty would be well-deserved boost for a home-grown success story already brimming with potential.”

John Charnock, UK Managing Director at specialist trade wine merchants Jascots, said: “We hold a large proportion of our stock ‘duty-paid’ so that we can send wines to our customers at short notice. As such, the huge duty costs in the UK have a very damaging effect on our cashflow and we frequently pay duty weeks, if not months, before selling and being paid for it.

“Ultimately a 2% drop in duty would help us to retain and develop our valued employees, hire new staff and to continue to deliver an excellent service to a vital sector of the UK economy.”

WSTA Chief Executive Miles Beale said: “The homegrown UK wine industry has emerged as an increasingly important industry in recent years with the potential for expansive growth in the next decade and beyond. However, this growth will be stunted if current levels of duty remain the same.

“Small companies working in the industry lack the necessary support and backing from the Government. These are organisations which can often operate on a small scale with highly skilled employees, but which have the potential to make a significant contribution to the economy, job creation and skills.

“This is why we are calling on the Chancellor to cut duty on wine at the next Budget, which will not only boost jobs and growth but also generate more than £1 billion for the public finances.”




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