A 2% cut in duty on wine and spirits would give the Treasury a £1.5 billion boost, according to new independent research commissioned by the drinks industry.
The Wine and Spirit Trade Association and Scotch Whisky Association tasked Ernst & Young with examining the economic impact of giving wine and spirits the same tax break beer has enjoyed in recent years.
It decided the Treasury would earn an extra £1.5 billion due to investment across the industry, greater income from corporation tax and VAT, and additional jobs created in shops, bars, restaurants and the wider supply chain.
The Chancellor would receive less money in duty, but this would be outweighed – according to Ernst & Young – by an the wine and spirits industry’s contribution to economic activity rising from £46.6 billion to £50.4 billion as it has greater freedom to invest and expand.
The trade bodies today launched a campaign called Drop the Duty, and they are also aiming to raise awareness of the high tax rate UK consumers currently pay.
Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “The wine and spirit sector already makes a significant contribution to the wider hospitality industry and to the British economy. Independent analysis from EY shows that the sector’s economic contribution could be £3.9 billion greater if it weren’t for the UK’s sky-high duty rates.
“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 £1.5 billion 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.”
David Frost, chief executive of the Scotch Whisky Association, added: “If you buy a bottle of Scotch Whisky to celebrate Christmas and New Year, nearly 80% 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% in next year’s Budget.
“New evidence shows that lowering these draconian levels of excise duty would actually boost public finances and the economy, as well as benefit consumers.”
Jonathan Isaby, chief executive of the TaxPayers’ Alliance, which is backing the campaign, said: “Politicians keep talking about a cost of living crisis but if those on the lowest incomes fancy a drink, they will pay through the nose in taxes. Over half the cost of an average priced bottle of wine and over three quarters of an average priced bottle of spirits now goes straight to the taxman.
“This is not only hurting hard-pressed consumers, but jobs and growth too. The Chancellor has one more chance to be fair and cut the duty on wine and spirits before the election, and it’s crucial that he takes it.”