WSTA pleads with Treasury

08 February, 2008

Warning that proposed tax hikes would spell disaster for drinks industry

Retailers and suppliers are backing the WSTA's stark warning to the Treasury that significant duty hikes will have a devastating effect on the drinks industry.

In its 2008 Budget submission, the WSTA said an increase in alcohol tax would put 50,000 jobs at risk and cost the Treasury £200 million, while doing nothing to combat binge drinking.

WSTA chief executive Jeremy Beadles urged Chancellor Alistair Darling not

to bow to pressure from anti-alcohol lobbyists, including the recently-formed Alcohol Health Alliance, which believes higher taxes would solve problem drinking in the UK.

He said: "Raising the price of alcohol by raising taxes will unfairly punish the majority of responsible drinkers for the misdeeds of a small minority.

"Our research shows that any such increases will do little to address problem drinking while hurting the economy and the Treasury. It simply does not make any sense."

An economic analysis carried out by the WSTA showed that if taxes were to rise 10 per cent on both wine and spirits, ≠consumption among sensible drinkers would decrease, leading to a potential loss of £102 million in duty for wine and £92 million for spirits.

Overall, the impact on the economy would be a loss of £1.57 billion for wine and £1.26 billion for spirits under a 10 per cent duty hike, causing inevitable job losses in the drinks industry.

Matthew Dickinson, commercial director at Thierry's Wine Services, said: "If the increase is massive there's a risk of serious fall-out. There's a case to be made that taxation doesn't affect consumption. If this is all about raising revenue there must be better ways than raising tax on alcohol."

Laithwaites head buyer Peter Greet said anything above an inflationary increase in duty would be "unjustified".

He added that smaller companies would struggle to absorb hikes and it would have "more of an impact on their daily lives".

Duty increase would be a turn-off at the polls

Six out of 10 people think raising taxes to tackle alcohol misuse would unfairly punish the majority of responsible drinkers, according to a poll for the Wine & Spirit Trade Association conducted by ICM. The survey found that 27 per cent of AB voters would be less likely to vote for a political party if it proposed a tax rise. Making parents take more responsibility was the most favoured option among voters to tackle alcohol-related disorder.

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