Alcohol taxation increased by 2% in the Budget

Alcohol taxation increased by 2% in the Budget

Chancellor Darling has announced that all duty rates on alcohol will
increase by 2%, from midnight tonight. Legislation is to be introduced
in Finance Bill 2009 to provide for these changes.

HM Revenue & Customs suggest that the impact of these
changes on retail prices for typical alcoholic drinks is equivalent to:

• 13p on a 70cl bottle of spirits;

• 1p on a pint of beer;

• 1p on a litre of still cider;

• 4p on a 75cl bottle of sparkling cider;

• 4p on a 75cl bottle of wine/made wine; and

• 5p on a 75cl bottle of sparkling wine.

The alcohol duty rates will be as follows:

Type	Rate
	Rate £ per litre of pure alcohol
Spirits	22.64
Spirits-based Ready To Drinks	22.64
Wine and made-wine: Exceeding 22% abv	22.64
	Rate £ per hectolitre per cent of alcohol in the beer
Beer	16.47
	Rate £ per hectolitre of product
Still cider and perry: Exceeding 1.2% – not exceeding 7.5% abv.	31.83
Still cider and perry: Exceeding 7.5% – less than 8.5% abv.	47.77
Sparkling cider and perry: Exceeding 1.2% – not exceeding 5.5% abv.	31.83
Sparkling cider and perry: Exceeding 5.5% – less than 8.5% abv.	207.20
Wine and made-wine: Exceeding 1.2% – not exceeding 4% abv.	65.94
Wine and made-wine: Exceeding 4% – not exceeding 5.5% abv.	90.68
Still wine and made-wine: Exceeding 5.5% – not exceeding 15% abv.	214.02
Wine and made-wine: Exceeding 15% – not exceeding 22% abv.	285.33
Sparkling wine and made-wine: Exceeding 5.5% – less than 8.5% abv.	207.20
Sparkling wine and made-wine: 8.5% and above – not exceeding 15% abv.	274.13

 
Source: HM Revenue and Customs.

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Institute of Alcohol Studies response.

The Institute of Alcohol Studies welcomes this rise in the
level of taxation levied on alcoholic beverages. This should lead to a
decrease in levels of overall consumption and a decrease in levels of
alcohol-related harm.

Alongside negative annual inflation as measured by the
Retail Price Index (RPI) and a potential slowdown in the growth of
disposable household income, this rise in taxation on alcohol should
mean that alcohol becomes less affordable, as measured by the Office for
National Statistics. This would be against the trend of the past 2
decades.

Supermarkets continue to sell alcohol at a cheaper price
than the on-trade and it seems that they are able to absorb increases in
alcohol duty to some extent. The Government should continue to monitor
the discrepancy between supermarket and on-trade prices.

Further information on the Budget can be found here: