Hi Dan, good to read your thoughts. Here are a few of mine.
Both Cider and Wine used to be taxed by volume of product, not ABV. That changed with Sunak's duty reforms of 2023.
The trade did lobby for a fairer, and preferably single, tax rate across all alcohol but the government was hellbent on keeping the existing inequalities between cider, beer, wine and spirits. No point flogging that particular horse, however strong the argument remains.
The trade lobbied successfully for a provision for wine that took into account the changing ABVs from bottling to bottling and vintage to vintage, using the same 'tolerance' argument still provided for cider today. Cider can be labelled, and taxed, with a 1% ABV tolerance. That's about 20% if most cider ferments to around 5%. The provision for wine in effect allowed a tolerance for taxation purposes that made wine, like cider, able to fit the new tax-by-ABV policy. The tolerance was much less than cider's 20% (about 12% either side of 13%ABV) and offer course other legislation meant wine still had to be labelled to within 0.5%ABV.
That provision should have been the end of it but was made temporary by the last government, with precious little time to persuade the incoming government to make it permanent.
The argument about forecasting duty is another thorny one. The Office for Budget Responsibility produces forecasts that the government, post-Kwarteng, would be unwise to ignore. But those forecasts for duty receipts are extremely questionable, as they draw a straight line of annual growth till the end of this parliament, irrespective of the hugely increased tax rate on wine (which is the biggest net contributor of duty). You can't challenge the OBR's forecasts directly because their only client is the government. You can't challenge the government about using the OBR's forecasts because of the Truss/Kwarteng debacle.
As a SME I still have to engage with calculation of duty on a regular basis. Buying in Bond is one important way smaller businesses can remain competitive yet improve margin. I have wines at 48 different taxable ABVs between 8.5 and 22%. It does mean a lot more work and need for communication. The government says duty is going up by RPI inflation but some wines are seeing duty increases of 20%, on the back of 20% increase in 2023.
I can't see what we should have done differently than push hard for the easement to be made permanent, given the duty receipts and taxation rate arguments were already off the table.
Really appreciate your responce. Yhere’s still a lot of technical points made about tolerances and “48 different taxable bands”, when this is effectively the way we already treat all spirits, and beer. We have the systems in place to deal with this, and as I highlighted, wines are already being formulated to adhere to consistent (and Lower labelling).
My core argument is we should have dealt quickly and quietly with the change in calculation, and focussed on the net increases at a “per litre of alcohol” level, rather than creating too many graphs about increments.
A less mathematical message could have made it easier to get broader engagement. Obviously this is all in retrospect, and there was unity from many on the damaging and disproportionate impact of the increases.
Hi Dan, good to read your thoughts. Here are a few of mine.
Both Cider and Wine used to be taxed by volume of product, not ABV. That changed with Sunak's duty reforms of 2023.
The trade did lobby for a fairer, and preferably single, tax rate across all alcohol but the government was hellbent on keeping the existing inequalities between cider, beer, wine and spirits. No point flogging that particular horse, however strong the argument remains.
The trade lobbied successfully for a provision for wine that took into account the changing ABVs from bottling to bottling and vintage to vintage, using the same 'tolerance' argument still provided for cider today. Cider can be labelled, and taxed, with a 1% ABV tolerance. That's about 20% if most cider ferments to around 5%. The provision for wine in effect allowed a tolerance for taxation purposes that made wine, like cider, able to fit the new tax-by-ABV policy. The tolerance was much less than cider's 20% (about 12% either side of 13%ABV) and offer course other legislation meant wine still had to be labelled to within 0.5%ABV.
That provision should have been the end of it but was made temporary by the last government, with precious little time to persuade the incoming government to make it permanent.
The argument about forecasting duty is another thorny one. The Office for Budget Responsibility produces forecasts that the government, post-Kwarteng, would be unwise to ignore. But those forecasts for duty receipts are extremely questionable, as they draw a straight line of annual growth till the end of this parliament, irrespective of the hugely increased tax rate on wine (which is the biggest net contributor of duty). You can't challenge the OBR's forecasts directly because their only client is the government. You can't challenge the government about using the OBR's forecasts because of the Truss/Kwarteng debacle.
As a SME I still have to engage with calculation of duty on a regular basis. Buying in Bond is one important way smaller businesses can remain competitive yet improve margin. I have wines at 48 different taxable ABVs between 8.5 and 22%. It does mean a lot more work and need for communication. The government says duty is going up by RPI inflation but some wines are seeing duty increases of 20%, on the back of 20% increase in 2023.
I can't see what we should have done differently than push hard for the easement to be made permanent, given the duty receipts and taxation rate arguments were already off the table.
Cheers, Hal! Thought this might ring with you.
Really appreciate your responce. Yhere’s still a lot of technical points made about tolerances and “48 different taxable bands”, when this is effectively the way we already treat all spirits, and beer. We have the systems in place to deal with this, and as I highlighted, wines are already being formulated to adhere to consistent (and Lower labelling).
My core argument is we should have dealt quickly and quietly with the change in calculation, and focussed on the net increases at a “per litre of alcohol” level, rather than creating too many graphs about increments.
A less mathematical message could have made it easier to get broader engagement. Obviously this is all in retrospect, and there was unity from many on the damaging and disproportionate impact of the increases.