Philip Hammond is being urged to scrap planned tax rises to support the home grown English and Welsh wine industry.
Frustrated English wine producers have put their concerns over Government’s lack of support for the industry in a letter to the Chancellor and Environment Secretary Michael Gove calling for a freeze on wine duty.
In the letter signed by 12 of the WSTA English wine members says the significant tax burden is restricting growth and is damaging to rural communities.
Britain’s biggest wine producers want to understand why the Government insists on taxing what we do best most heavily.
Sam Linter Managing Director and Head Winemaker at Bolney Wine Estate:
“We find it difficult understand why the Chancellor insists on continuing to tax so heavily this great British product. We can now proudly say that our wines are competing with some of the best all over the world, and it is disappointing that we are being taxed so heavily at home. We are fully behind the WSTA’s call for the chancellor to freeze wine duty and help the English wine industry continue to grow.”
Mark Driver, founder and owner of Rathfinny Wine Estate with his wife Sarah, said:
“When two thirds of wine produced in England is sparkling wine and it’s widely perceived as some of the best sparkling wine in the world, it seems illogical that the duty on sparkling wine is 28% higher than still wine. In fact it’s the most harshly treated of all alcohol categories. We support the WSTA’s call to freeze wine duty and we’d like to see the government support our growing domestic sparkling wine industry by harmonising the rate of duty between still and sparkling wine.”
In March the Chancellor increased wine duty by 3.9% which added 8p to a bottle of still wine and 10p to sparkling. Yet despite the rise, the Chancellor now plans to increase wine duty again, just 8 months after the last one, by 3.4% in the November Budget adding another 7p to still and 9p on sparkling.
The rapid spread of English vineyards making top quality wine has led experts to comment that the UK is where New Zealand was 30 years ago in the comparative size and the success of its wine industry.
To have a chance of emulating New Zealand’s successes English and Welsh wine industry needs its governments backing.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:
“English wine is a great British success story and we are now producing top quality wines for the home market as well as to export. The UK has the potential to follow in the footsteps of New Zealand’s trail blazing wine success story, yet the industry is being held back by the staggering amount of duty it has to pay. By adding to its already high tax bill this year, the Chancellor will hurt the industry’s ability to grow, invest export and create jobs.
We therefore urge the Chancellor to support this home grown industry and freeze duty in the November budget.”
Following the freeze in 2015, wine duty income increased by £136m, up 3.6%, on the previous year.
The current Chancellor’s harsh duty policy is a stark contrast to how other countries treat their vineyards and wine makers.
Around two thirds of the wine made in England and Wales is sparkling wine which attracts the most duty, at £2.77 on a bottle of fizz. UK consumers pay £2.16 for a bottle of still wine.
In New Zealand they pay less than half the duty at £1.18per bottle of still or sparkling wine.
In France, where the wine industry is heavily supported, consumers pay the equivalent of just 7p a bottle on duty for sparkling and 3p for still.
In the EU only Ireland, with no domestic wine industry, has a higher rate of excise duty on sparkling wine.
The UK alcohol industry is one of the most heavily taxed in Europe, with British drinkers paying an extraordinary 68% of all wine duties collected by all 28 EU member states. This is by far the most of any member state despite accounting for only 11 per cent of the total EU population.
English sparkling wine has been gaining international recognition over the past few years, leading to a trophy cabinet bursting with awards and attracting Champagne houses, such as Taittinger and Pommery, to invest in English vineyards.
There are over 500 Vineyards in England and Wales and around 150 wineries producing 5m bottles of wine a year.
An English wine producer selling 250,000 Bottles of sparkling wine in the UK this year will face a duty bill of close to £692,500. The rise in March added £26,000 to this bill and the Government’s planned rise will add a further £24,000 in November. This is money that could have gone in to investing in new land, vines, machinery, growing its workforce or helping it export.