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Go with the cash flow

7 Dec 2009
LONDON - JANUARY 5: Chancellor Alastair Darli...
Image by Getty Images via Daylife

… or “How I will do my bit for the economy of this country via the wine aisle”

For the last few years, pretty much since I started blogging, I’ve had something to say about the underhand way that the government uses Duty on wine to line their coffers, usually at the expense of the consumer, but by implication also affecting everyone else in the chain, from retailer to producer.

I have tried to argue that our Duty system, with high taxes on EVERY bottle of wine, no matter how good (or poor), have little impact on whether consumers drink to excess, which is supposed to be one of the reasons to raise the price.

I have tried to argue that lowering taxes would enable producers to invest more in the quality of the product and their communication/marketing, educating consumers to drink better, and drink more responsibly.

To no avail, of course.

Earlier this year, the Treasury admitted in a letter (during a campaign by Le Beast wines, Harpers, Drinks Business and Off Licence News) that:

“…alcohol duty is an important revenue stream for the government”

and

“The alcohol duty increases announced at Budget were not designed to tackle problem drinking but they will play their part in ensuring we can continue to fund the Government’s spending priorities.”

It seems that the anti-alcohol lobby and politicians are allowed to use these as justifications for putting Duty up, but when they get the money, they can then spend it on whatever they wish.

So, I’m changing tack.

Let’s be realistic: If the government needs money to shore up our economy and get people back to work (or keep them in work), then they will be forced to raise taxes. They could*:

  • tax me harder on my income, thus making me have to work longer/harder
  • tax me more on stuff I buy (VAT), thus discouraging me from buying that ’stuff’ and thus not making money OR,
  • raise money from me while I am enjoying one of life’s real pleasures; drinking wine

To be honest, thinking about it like this (as I did when I went to sleep last night), I would rather be paying them extra dosh while I have fun, not while I work (of course, in my case I’m doing both).

So, Mr Chancellor (or simply Darling as we will now call him), I’m not excusing you. You could still do A LOT more to support wine businesses, producers, retailers, consumers and the health of this country, but as you do not seem to be prepared to do this, I guess I will just have to do my bit for the economy of this country via the wine aisle.

I hope you appreciate it!

And, Darling, when we start to emerge from this fiscal black hole you have helped to get us into, I trust you will do the decent thing and engage in a proper dialogue about what is actually good for the many responsible drinkers in this country.

Now, I’m off to pay some taxes, … by the glass.

* Of course, I suspect they’ll do all 3 of course! Watch out for 20% VAT, higher income tax and increases on Duty as a triple-whammy

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This entry was posted on Monday, December 7th, 2009 at 6:31 pm and is filed under wine conversation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

  • Unfortunately, government will always be looking to increase its revenue stream. I understand the need for taxes and am willing to pay my fair share.

    What I am unhappy with is unreasonable tariffs and important taxes that make the wine marketplace become distorted. I want equal access to the wines of the world. I want quality/price ratios to be my key purchasing driver not to be skewed by unfair taxes or duties.
  • KAHUNA
    nice article- NJ raised the tax on alcohol also this year- It really is getting silly and in my mind driving competition down- Some stores are using this as a way to raise prices and what they do not realize is that bigger retailers are not-So now there are three local stores I do not even go in anymore as they were generally higher priced before but now it is not even an option. I stick to the bigger selection and better prices from the mecca WL 30 minutes from my house
  • No joke, smaller liquor stores are trying to squeeze more money out of people, when it is just as easy to go to a supercenter and get it for a fraction of the price.
  • Duty?! What's the character limit?
    As a wine importer I have many (mainly bad) thoughts on Duty. It is effectively a stealth tax - the government knows it can charge high amounts per bottle of duty on alcohol since the price of alcohol is not very elastic, in other words raise the price of drink and people will still buy. What's frustrating is that this form of tax is not reinvested into the industry that pays it, the importers, consumers etc. It's one thing paying high taxes which one can see coming back into the community be it roads, schools or hospitals etc. Paying £1.61 + VAT on still wines, 0.75 l, is astronomical and I for one don't see where this money goes, who it helps and why we pay it?? The worst thing is that there is absolutely nothing we can do about it as regardless of the party in power this income stream is one they all need. Don't forget that as well as the actual charges duty employees quiet a few people too! Bonded warehouses, HMRC customs staff, Duty deferment accounts, SIVA etc.
    One of the side effect of unreasonable duty, in some cases the duty charge is higher than the cost of wine is the creation of a black market, read: smuggling. Have you ever gone into your local "Food & Wine" and seen a £2 a bottle of Italian red? If not have a look at a picture I took on Munster Road this week (attached) - that's right, Central London, in full sight with a big promo attached! Lets do the math, £2/bottle (OK...?), take away VAT @ 15 % that's £1.73, now take away the duty @ £1.61 and you have a total of 13 pence left, in which you should assume the importers' margin, the shop's margin, transport from Italy, storage and domestic distribution, not forgetting overheads etc...maybe, but far more likely the bottle has been smuggled into the UK and sold for cash, to everyones detriment since, no duty or VAT has been collected on smuggled goods.
    Cheers Darling!
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