Wine trade warns of tax 'quintuple whammy'

A 10 per cent increase in taxes on alcohol would see more than 50,000 jobs lost in the industry and the economy losing out to the tune of £2.8bn, the Wine and Spirit Trade Association (WSTA) has warned.

Ahead of Alistair Darling's first Budget on 12 March, when he is widely predicted to hike taxes on wine and spirits amid concerns about binge drinking, the WSTA warned in its submission to the Treasury that increases would have potentially catastrophic consequences for the industry.

"Not only would increases in tax punish the majority of responsible drinkers, but such increases would do little to reduce problem drinking while reducing revenue for the Treasury," said Jeremy Beadles, chief executive of the WSTA.

The study commissioned by the trade body argues that a 10 per cent rise in tax would only lead to a 1.9 per cent reduction in the consumption of wine and a 4.8 per cent cut in the consumption of spirits.

"Increasing the excise duties on wine and spirits could run the risk of a quintuple whammy – leaving heavy drinking unaffected, reducing the enjoyment of innocent drinkers, encouraging illegality through smuggling, losing tax revenue and reducing GDP," says the study.

The WSTA recently warned that British drinkers already face the prospect of having to pay around 10 per cent more for their favourite tipples this year because of poor grape harvests and the increasing cost of raw ingredients.

"A large increase in tax this year would be at the worst possible moment for the industry," said a spokesman for the trade body. "We want the Government to look at more effective ways to tackle the problem of excessive drinking in Britain."