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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.


 

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: