The ‘Sin Tax’ Black Hole is Coming to Get Us
Posted on Mon 30th May 2016 at 11:50
George Osborne isn’t one of our favourite people at the best of times, but the recent budget news has rendered him as something akin to the Sheriff of Nottingham.
If you haven’t yet heard, it appears that Osborne has just discovered a £58 billion black hole in fuel and sin tax receipts – meaning that we’re in for big hikes in tax on things such as petrol, cigarettes and alcohol. The ‘sin tax’ is a duty levied on all the little vices that people enjoy on an everyday basis – tobacco and alcohol being the chief of these. Although it is much more likely that the tax will rise on cigarettes rather than alcohol, as Osborne is keen not to alienate drinkers, there is the risk that he will seek to compensate for the £13.9 billion shortfall on beer, wine and spirits levies by adding even more tax onto our drinks – and don’t forget that there is already £2.05 tax on every bottle of wine sold in the UK. We will just have to hope that he sees sense come Wednesday! Meanwhile Osborne is also planning to raise tax on petrol by as much as 2p in the pound. He can do this because fuel prices have fallen so low in recent months, something that has greatly benefitted Britain’s businesses – or at least it did until 16 March. In other words, not only might there be a higher tax on wine, but it will be more expensive to transport it around the country, too.
Trade Lobbies for Tax Cut Rather than Tax Rise this Wednesday Did you know that the French pay just 2p of tax on every bottle of wine, and the Italians pay nothing at all? By contrast, Britons pay £2.05 on every bottle and, shockingly, we pay around two thirds of the alcohol duty levied across the entire continent. The ENTIRE continent. It’s not surprise, therefore, that Britain’s winemakers are lobbying George Osborne to give them a break. The CEO of the Chapel Down winery Frazer Thompson, for example, recently told the Guardian that high wine duty "does stifle innovation and put up barriers. Wine has been seen as something that is easy to tax because it was for wealthy people. But wine is for everybody now”. Here Thompson hits the nail on the head, and proves that it’s not just a problem for English winemakers alone. Wine producers from every country who want to introduce the style and beauty of their wine to the United Kingdom are stifled by the duty barrier – why should consumers spend extra when they have cheap wine alternatives just a train ride away? Tax cuts in the previous budgets have demonstrated how a small drop in duty can stimulate growth in wine sales, stimulate the economy and create more jobs – not to mention allow hardworking British consumers to explore the wonderful world of wine. Reversing the cuts in duty will stifle growth, cut jobs and disadvantage British consumers.
The trade should be commended for their hard pre-budget lobbying and we’re keeping our fingers crossed that it pays off this Wednesday!