Bottle of wine to cost 45p more in tax raid
Chancellor is expected to announce rise in line with inflation in biggest duty surge for half a century
The price of a bottle of wine is expected to rise by about 45p thanks to an alcohol tax raid to be announced in the Budget. Jeremy Hunt, the Chancellor, is set to confirm tomorrow that alcohol duties will rise with inflation from Aug 1 despite cost of living pressures. A new system for taxing alcohol will come into effect, with stronger drinks to have higher duties. It will mean about 90 per cent of still wines will see an increase in the amount they are taxed this summer.
THE price of a bottle of wine is expected to rise by about 45p thanks to an alcohol tax raid to be announced in the Budget.
Jeremy Hunt, the Chancellor, is set to confirm tomorrow that alcohol duties will rise with inflation from Aug 1 despite cost of living pressures, The Daily Telegraph understands. At the same time, a new system for taxing alcohol will come into effect, with stronger drinks to have higher duties.
As a result of the measures, about 90 per cent of all still wines will see an increase in the amount they are taxed this summer, according to industry estimates, with the rises likely to be passed on to consumers in higher prices.
It will be the biggest duty increase for wine in more than 50 years, according to the Wine and Spirit Trade Association (WSTA).
Treasury ministers will likely argue that the industry has received large amounts of support from the Government in the past three years as the Covid-19 pandemic struck. However, industry figures are expected speak out against the rise, arguing that many alcoholic drinks are heavily taxed and drinkers are already facing a squeeze.
The duty increase for all alcoholic drinks is expected to be at least 10 per cent and could be higher, with the Treasury set to use a recent figure from the Retail Price Index for inflation. A second change will also come into effect at the same time, with the Government’s long-awaited shake-up of alcohol duties also kicking in this August.
The new system is based on alcoholic strength, with stronger drinks getting taxed more and weaker drinks being taxed less, meaning beverages are impacted differently. Some drinks, such as wine, are set to get a double whammy, being taxed more first because of the duty rise and then because of the impact of the new system. A bottle of still wine will be taxed about 44p more from August, according to analysis by the WSTA. It says it is the biggest increase in duty on wine since rates were standardised in 1971. It would be double the last biggest rise of 22p a bottle in 1975.
A bottle of port will be taxed £1.29 more and a bottle of sherry will be taxed 97p more, according to the analysis, which is based on the Treasury using a 10 per cent figure for inflation.
Miles Beale, chief executive of the WSTA, issued a plea, saying: “We are calling on the Chancellor to extend the freeze on alcohol duty to avoid pushing up prices for consumers, who are facing the worst cost of living crisis in decades.
“History has shown that freezing alcohol duty delivers increased revenue to the Exchequer. If duty rates went up by RPI, this would have been a crippling blow to the UK alcohol industry and consumers who would have to pay the price for tax rises.”