Osborne’s Beer Duty cut flouts law says wine industry


4:24 pm - March 20th 2013

by Sunny Hundal    


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George Osborne’s Beer Duty cut in today’s Budget has infuriated one prominent industry group at least: the Wine and Spirit Trade Association.

In a sternly worded statement they slammed the hike on wines and spirits and condemned the Chancellor for favouring beer.

Furthermore, they add, this could flout the law and be subject to a legal challenge.

The WSTA chief executive Miles Beale today released a statement saying:

This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest Government is unable to do so.

They say the Escalator, which has increased taxation by 2% above RPI inflation each year since 2008, will add another 10p to a bottle of wine and 53p to a litre bottle of spirits after the 5.3% rise announced today.

I called the WSTA to ask what legal precedent they were referring to.

They pointed me to this court ruling over EU competition laws

The ECJ case 170/78 ruled that wine and beer are seen as competing products, as they are both natural fermentation products unlike spirits, and therefore the UKs tax system had to be altered to ensure they were treated equally in the tax regime. This was because favouring home produces products was seen as a breach of the free movement of goods, as it restricted imports. Since the case, beer and wine duty in the UK has been at the same level per % of alcohol. This would be the first time since that case that any Government has sought to split this and would raise a question over its legality.

The ECJ case reference is European Commission vs UK, ECJ 170/78 which is available online here.

A more digestible analysis is available here on page 90.

In other words, the Chancellor is easily open to a legal challenge.

So will the WSTA take the Chancellor to court over this? They said it was “too early to say” and they would consult their members over it.

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About the author
Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


Sour grapes!

I’m guessing they won’t be able to retrospectively change the law for this one. What a shame.

3. James from Durham

They should stop whining.

It’s not illegal at all.

There is substantial precedent for this.

e.g. Ireland increased wine duty by 25% whilst freezing beer duty and recently increased wine duty by 41%, whilst increasing the beer duty rate by about half of this. In December 2011 Denmark increased wine by 30 percentage points more than beer. Both countries’ beer/wine duty ratios are now significantly higher than the UK’s. There are now five EU countries that have significant brewing industries but no recognised domestic wine industry (similar to Britain) that have duty regimes that are favourable to brewers.

More info here: http://www.beerandpub.com/industry-briefings/alcohol-duty-rates-treatment-of-different-categories-and-eu-law

didn’t France recently impose a huge hike on beer without a corresponding increase for wine ?

OP speculates rubbish. There is no requirement that wine and beer taxes should be the same in EU countries. For example:

France: beer in three different tax brackets, lowest considered “soft drink”; wine next to nothing

Sweden: beer 6.615 SEK per litre, wine 22.08 SEK per litre

Finland: beer taxed in two different brackets depending on alcohol content, plus soft drink category; wine taxed in five different brackets based on total volume.

Italy: beer in two tax brackets (soft drink and regular); no specific wine tax

Osborne was taking his orders from The Rich Tax payers Alliance. They demanded a cut in beer duty and Osborne caved in to his 1% masters.

Sally,

So you believe that the rich fops drink beer while the poor working man is restricted to wine? Have you ever lived in the UK?

Another back-of-a-fag-packet policy goes tits-up in record time.

The Rich tax payers Alliance is a pressure group of the 1% They demanded a policy, and Osborne folded like the posh deckchair he is. My advice to the wine industry is go hire the Rich tax payers Alliance. Osborne fears them and their donors.

But the rise in duty is not going to pay down Osbornes pretend concern , the deficit. He has given away about £58 billion over 5 years to big business in tax cuts. The wine a spirit industry should be grateful for the big cut in corporation tax and income tax for its top managers. But instead they whine like the over privileged lazy rich always do.

Osborne lied when he said deficit was number 1 priority. He has given billions in tax cuts to his rich chums. Lib dems are morons for supporting this rich give away. All in it together? Lies lies lies. But then lib dems like to lie, their whole manifesto was a the biggest lie of all.

As for the tories, still the party of the rich, and still supported by cretins.

11. Planeshift

Personally I’m looking forward to the additional 5 pence a week this policy will give me.

12. Luis Enrique

Planeshift

I know! it makes me feel much better about all the unemployment and stuff

13. Shatterface

After about a month I’ll have saved enough money for a packet of pork scratchings.

The significance of this reduction though is that it sticks two fingers up to the social engineers and the health police.

We’ve had the threat of massive increses in regressive tax hanging over beer drinkers for years now: hopefully the teetotalitarians can fuck off back to the Prohibition and leave the rest of us the hell alone.

This is nonsense. Beer and wine are not taxed the same per % of alcohol – beer is taxed according to strength, whereas table wines are taxed at a flat rate. At a typical strength, the duty is roughly equivalent, but the basis on which it is calculated is completely different.

Sally, wasn’t most of the heavy lifting in the campaign against the beer duty escalator done by CAMRA, which is something of a lefty organisation? TPA only came in right at the end.

Sally, most of the heavy lifting in the campaign against the beer duty escalator was done by CAMRA, which is something of a lefty organisation. The TPA only came in right at the death.

Wine lobby opposes increase in wine duty!

New Pope “Catholic”!

Any breaking news on ursine toilet habits?

18. Shatterface

I’ve a feeling Communion wine might be tax exempt.

19. Chaise Guevara

@ 13 Shatterface

“The significance of this reduction though is that it sticks two fingers up to the social engineers and the health police.”

Rather more like it pays lip service to giving people what they want by putting a tiny reduction on the drink generally used as a popularist symbol, while increasing tax on the other ones far more.

What’s next, effectively freezing public sector wages but making an exception for the armed forces? Oh wait.

“We’ve had the threat of massive increses in regressive tax hanging over beer drinkers for years now: hopefully the teetotalitarians can fuck off back to the Prohibition and leave the rest of us the hell alone.”

…And there was much rejoicing.

20. Chaise Guevara

While were on the subject, could we get a cut on cigarette taxes? I’m not against vice tax on fags in principle, but it went past the taking-the-piss point quite a while ago now. Also, it seems a teensy bit unfair to drag all that money out of a small percentage of the population who are addicted to the product in question.

“We’ve had the threat of massive increses in regressive tax hanging over beer drinkers for years now: hopefully the teetotalitarians can fuck off back to the Prohibition and leave the rest of us the hell alone”
Please buy him a pint, he is losing it.
What I would say for a year.
Put 10% raise on taxes for biscuits, chocos, booze, fags and other items.
Legalise weed and prostitution for a year, get the taxes. In fact think of the tourist opportunities. London could be the New Amsterdam , sorry Elvis. Hopefully the income brought in would decrease the deficit quite substantially.
Then reduce the taxes and stop the naughty activities.


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