budget 2021 Archives - Drink and Drugs News

A ‘major simplification’ of the alcohol duty system has been announced by the chancellor, Rishi Sunak, as part of the autumn budget. Drinks are to be taxed in proportion to their alcohol content, making the system ‘fairer and more conducive to product innovation in response to evolving consumer tastes’, the government states. The move has been enabled by the ‘regulatory and legislative flexibilities’ of leaving the EU, says Autumn budget and spending review 2021. Chancellor Rishi Sunak: Proposed new system would be 'simpler, fairer and healthier' ‘Now that the UK is free to set its own law in this area, the government is reforming alcohol duties to best suit national priorities,’ says the document, overhauling an ‘outdated’ system. Separate tax categories, such as for beer and wine, will move to a standardised set of bands, with different rates for products between 1.2-3.4 per cent ABV, 3.5-8.4 per cent, 8.5-22 per cent and those above 22 per cent. Above 8.5 per cent, products across all categories will pay the same rate of duty if they have the same proportion of alcohol content. ‘Alcohol will be taxed in a progressive manner, ensuring higher strength products incur proportionately more duty, addressing the problem of harmful high-strength products being sold too cheaply,’ the document says. The government is also introducing new rates for low-strength drinks below 3.5 per cent to ‘encourage manufacturers to develop new products at lower ABVs, giving consumers greater choice and greater options to drink responsibly’. These rates will also be the same for all product categories. New relief that cuts duty rates on draught beer and cider by 5 per cent will also be introduced, a move that ‘recognises the importance of pubs and supports responsible drinking’. ‘Draft Relief’ represents the biggest beer duty cut for 50 years and the biggest cut to cider duty since 1923, the government states. The duty rates on beer, cider, wine and spirits will also be frozen for another year, ‘providing further support to the hospitality industry and its suppliers as they recover from the pandemic’. ‘First introduced in 1643 to help pay for the Civil War, our alcohol duty system is outdated, complex and full of historical anomalies,’ Sunak said in his budget speech. ‘The World Health Organization have warned that countries like the UK which follow the EU rules are, and I quote, “Unable to implement tax systems that are optimal from the perspective of public health”. So, today, we are taking advantage of leaving the EU to announce the most radical simplification of alcohol duties for over 140 years.’ The new system would be ‘simpler, fairer, and healthier’, he said, designed ‘around a common-sense principle – the stronger the drink, the higher the rate. This means that some drinks, like stronger red wines, fortified wines, or high-strength “white ciders” will see a small increase in their rates because they are currently undertaxed given their strength. That’s the right thing to do, and it will help end the era of cheap, high-strength drinks which can harm public health and enable problem drinking.’ Many lower alcohol drinks were overtaxed ‘and have been for many decades’, he continued, with the new rules meaning lower rates on drinks like rosé, liqueurs, and lower strength beers and wines. The reforms would come into effect in February 2023, he said, although the planned increase in duty on spirits, wine, cider and beer due to come into force this week has been cancelled with immediate effect – ‘a tax cut worth £3bn’. The reforms ‘back pubs and public health’, he said, and ‘are only possible because we’ve left the EU’. Prof Sir Ian Gilmore: freezing alcohol duty is 'totally misguided' The announcement was welcomed by the Alcohol Health Alliance, who said they looked forward to examining the plans in more detail. ‘We have long campaigned for changes to the way alcohol is taxed to ensure that the strongest, most harmful drinks always cost the most as they cause the most damage to society,’ said chair Professor Sir Ian Gilmore. ‘However, the decision to once again freeze alcohol duty is totally misguided. We are already at crisis point when it comes to alcohol harm. Deaths caused by alcohol reached record highs in 2020 and making alcohol even cheaper will only deepen the health inequalities that this government had promised to address. For years, alcohol duty has been cut or frozen in the budget. This has cost the Treasury £1.8bn annually – money that is desperately needed elsewhere to aid the COVID-19 recovery. 'Revenue generated from alcohol tax doesn’t even begin to cover the costs to society of alcohol harm. We need the government to make the most of the opportunity that has been created with the new duty system to introduce much more ambitious measures to decrease the affordability of alcohol and reduce its unacceptable harm to our communities.’ The decision to cancel this year’s planned increase in duty was ‘deeply regrettable’, added Alcohol Change UK’s director of research and policy, Lucy Holmes. The chancellor had ‘missed yet another important opportunity to significantly reduce the harm caused by alcohol and to cover the costs of that harm. Instead, he has given a tax break to massive alcohol producers who have continued to see huge profits throughout the pandemic.’ However, the organisation ‘strongly’ welcomed the new simplified system of taxing drinks according to strength, she said. ‘We have been calling for an overhaul of the system to make it fairer, more consistent and geared towards promoting public health. While this change won’t come into force until 2023, it represents a welcome improvement. We will carefully scrutinise the detail of the other proposed changes but if the strongest, cheapest drinks rise in price, this will go a long way to reducing alcohol harm and is to be welcomed.’ A consultation on the proposed changes is now open at www.gov.uk/government/consultations/the-new-alcohol-duty-system-consultation Budget documents at www.gov.uk. Read the autumn budget and spending review statement here

Tag: budget 2021

Chancellor announces radical overhaul of alcohol duty system