Government alcohol duty change will lead to rising wine costs

The government’s proposed changes to alcohol duty will hike up prices and reduce choice for wine drinkers, warns Laithwaites wine merchant owner, Direct Wines.

The proposals come part of Rishi Sunak’s October Budget, which is set to cut taxes on sparkling wine, draught beer and cider but rise taxes on stronger beverages such as red wine. 

According to the BBC, the new system, which will come into force in 2023, has been described as the “most radical simplification of alcohol duties for over 140 years.” 

READ MORE: Inflation-hit wine industry sees ‘frightening’ price rises

However, the Wine and Spirit Trade Association (WTSA) warned that 80% of white wines will face a duty hike and 90% of red wines will come under a higher rate of tax. 

Additionally, the WTSA has calculated that the new alcohol tax system would increase costs to £250 million a year for the wine trade. 

Direct Wines treasurer Tim Curtis said the new wine trade system was “crippling” and the average price of wine would “certainly go up for the UK consumer”. 

This comes as the WTSA warned port and sherry drinker of the new tax systems impact on higher ABV drinks in December 2021. 

According to the WTSA, producers have predicted that the prices of port and sherry will increase by 13%. The price of a bottle of port or Olorose sherries is expected to increase by £1. 

“We are mystified by a proposal that embeds unfairness between products meaning that beer and cider will be taxed at much lower rates than sherry and port which will force up the duty paid on some fortified wines by as much as £1 or more,” WTSA chief executive Miles Beale said. 

“Government needs to ensure that we aren’t left with a new system that is demonstrably less fair and more administratively complex, which were the tests the Treasury set itself.” 

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