The drinks industry has warned that consumers face further drinks price rises after the chancellor announced a 5% increase in excise duty in today’s Budget.
George Osborne decided to continue the alcohol tax escalator, which automatically increases tax on alcohol by 2% above inflation.
The WSTA (Wine and Spirit Trade Association) said today’s tax increase added to the pressure on a sector that has seen volume sales continue to decline in the past year as consumers reined in spending.
The rate of alcohol taxation in the UK was now “so out of step with our European neighbours” that visitors to the London Olympics will face paying 50% more for an average bottle of wine (£4.89) than if the Games were being held in Paris (£3.26) and triple what they would pay in Madrid (£1.52).
Duty and VAT already account for three-quarters of the average price of a bottle of spirits and half the price of a bottle of wine. The latest duty rise equates 11p more on a 750ml bottle of wine; 41p more on a 700ml bottle of spirits at 37.5% abv; and 3p more on a pint of beer. These forecast price increases include VAT.
The tax increase comes into effect from 00.01 on Monday 26 March.
The chancellor also referenced the government’s imminent alcohol strategy but did not refer specifically to any proposed measures it may contain.
WSTA interim chief executive Gavin Partington said: “Today’s Budget puts Britain on course for an Olympic record that gives no cause for celebration.
“Consumers and businesses are already paying the price for the excessive duty increases in recent years and today’s news means more price rises are on the way.
“Whilst we recognise the pressure on the public finances, the mounting duty burden on the sector is holding it back from contributing fully to the UK’s economic recovery.”