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How alcohol duty hikes hit the Exchequer.

The last alcohol duty increase cost the government more than 25m [pounds sterling] in tax revenue on wine alone, The Grocer can reveal. And with duty fraud increasing, it can no longer rely on successive above-inflation duty hikes not to impact on sales and jobs either.

That is a key message of The Grocer's Push Back the Tax campaign, which is calling on the government to freeze the double whammy booze tax escalator.

Wine volumes fell by 12 million bottles over the past year, costing the Treasury at least 26.5m [pounds sterling] in duty and VAT revenue, according to calculations by The Grocer.

And volume sales across beer, wines and spirits are expected to fail further if the punitive duty escalator is introduced in 2010 at the same time as VAT returns to 17.5%, jeopardising thousands of jobs.

Wholesalers also warn still more revenue will be lost through duty fraud as duty goes up. Government estimates suggest spirits duty fraud alone costs the taxpayer 500m [pounds sterling] a year. "If duty was to go up again it will drive more people to fraud," said Bestway MD Younus Sheikh.

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The government has admitted in a letter to Clink! MD Catherine Monahan, seen by The Grocer, that duty increases are intended to raise money for its spending priorities rather than to tackle problem drinking or public health.

Drinks companies S&N, Global Brands, Halewood International, Wells, Inter Continental Brands, and Young's are among suppliers signing up this week to support our campaign. Mso joining were The Coop Group, Musgrave Retail Partners GB, Makro, Netto and Morrisons. "We don't want to be held hostage to constant changes in the VAT rate, which will be distracting to analysts," said CEO Marc Bolland. "But the distraction for our staff is even more difficult. We're busy enough at Christmas, as it is. The timing has not been thought through."

The Grocer Team
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Title Annotation:PUSH BACK THE TAX
Comment:How alcohol duty hikes hit the Exchequer.(PUSH BACK THE TAX)
Publication:Grocer
Article Type:Brief article
Geographic Code:4EUUK
Date:Jul 18, 2009
Words:320
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