The Wine & Spirit Trade Association (WSTA) has used the 650th anniversary of the Anglo-Portuguese Treaty to highlight forthcoming tax hikes for fortified wines.
The WSTA said the alliance, formed in 1373, was followed by the Methuen Treaty, boosting trade by giving preferential tax treatment for British textiles and Portuguese wines.
“The trading bond is set to be severed by the government’s new alcohol taxation system, which will see fortified wines worst hit,” the WSTA said.
Port at 20% abv will be subject to a 44% duty increase and the WSTA calculated that most fortified wines will go up by around £1.50 per bottle.
“Unlike still wine, which is being given 18 months’ breathing space before being taxed according to its strength, the fortified wine sector will be impacted straight away,” the WSTA added.
The fortified wine sector is bound by strict abv classifications, therefore cannot opt to produce lower-strength alternatives – a measure several still wine producers are exploring.
WSTA chief executive Miles Beale said: “We keep hearing government claim their priority is to tackle inflation, but alcohol tax rises will only further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.
“The punishing duty rises facing the fortified wine sector are totally unnecessary and could be avoided with a simple compromise solution – offering the same 18-month easement period given to still wine. We are asking government to avoid new red tape and help businesses by taxing fortified wines between 15.5% and 20% at a midpoint of 17.5%.”
The WSTA argued that this solution would ensure a manageable transition to the new duty system to avoid job losses and overnight price hikes.
Steve Moody, executive chairman of Fells, the largest distributor of port in the UK, said: “The government is set to throw away some of the benefits of the longest alliance between two countries in history.
“British port growers and shippers have been based in Porto and the Douro Valley literally for centuries. Hitting the port industry with red tape and a tax hike seems a strange way to celebrate 650 years of trade – especially from a government that professes a pro-growth agenda.”