The Chancellor’s new system, through which drinks will be taxed in line with how much alcohol they contain, is “worrying for wine businesses” and “costly for consumers”, the boss of the Wine and Spirit Trade Association claimed as he alerted the UK might lose its status as an international wine-trading hub.
Miles Beale, chief executive of the association, said: “It’s a mystery to us why the Government is determined to drown any potential Brexit benefits under lashings of elective new red tape.”
Under the new system, which Mr Sunak announced in last year’s Autumn Budget, draught beer, prosecco, liqueurs and other drinks will go down in price as taxes are being slashed on them.
Meanwhile, the duty levied on wine with alcohol content above 11 percent, such as high-strength ciders and fortified wines like port and Buckfast, is increasing.
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Mr Beale said: “The benefits of abolishing costly and time-consuming VI-1 wine import certification and some smaller changes to EU regulations will be blown out of the water if the Government ploughs ahead with complex, unfair and unworkable changes to the alcohol duty system.
“This is existentially worrying for wine businesses today. It would also be costly for consumers, who would see 70 percent of all wines rise in price – 80 percent of still wine, 95 percent of red wine and 100 per cent of fortified wines.”
The changes are taking effect in 2023 and, branded a “radical simplification”, are set to create a “fairer and healthier” system based around the following principle – “the stronger the drink, the higher the rate”.
Beer is set to see the biggest duty cut in 50 years, yes. But other drinks, because they are “currently undertaxed given their strength”, as justified by Mr Sunak last October, will see price hikes difficult to digest for companies and drinkers.
For instance, according to industry estimates, white wines such as Hardys Crest and Yellow Tail chardonnays (both £7), which have an alcohol by volume (ABV) of 13 percent, will go up by 35p a bottle.
The Chancellor, who is teetotal, argued the move would contribute to ending an age of cheap high-strength drinks that “harm public health and enable problem drinking”.
But Mr Beale, accusing the Government of ignoring the impact on an industry that employs 130,000 people, is worth £11billion annually in sales and already pays £4.4billion in duty, said the move could put the UK’s status as an international wine-trading hub at risk.
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Set to cost the Treasury £555million by 2027, the plan was presented as possible thanks to Brexit because previously, the EU’s mandatory requirements on how alcohol is taxed limited the Government’s ability to reform as it wished.
Mr Sunak said the alcohol duty system was “first introduced in 1643 to help pay for the Civil War” and that, considering it was “outdated, complex and full of historical anomalies”, it was time to give it a twist.
A Treasury spokesman said: “Leaving the EU has enabled us to reform our outdated alcohol duty system, replacing old rules with a common-sense approach that puts the taxation of stronger beers, wines and spirits on an equal footing, making many wines more affordable for UK drinkers, such as English sparkling wine, which will be slashed by 64p a bottle.
“This comes on top of freezes to alcohol duty at the Autumn Budget, saving consumers £3billion over the next five years.”
The Wine and Spirit Trade Association, though, argues the new system “unfairly places a significant financial burden on to the wine and spirit sector”.
In a campaign trying to overhaul the plan, they call “on businesses and consumers to contact their MP to influence the outcome of the consultation, and ensure that prices of wines and spirits are kept down”.
They added: “This is a unique opportunity to influence the alcohol duty system, and we need to ensure we leave no stone unturned if we are to shape the outcome.”