Channel bootleggers tax the system: Duty-dodging alcohol traffickers are cleaning up in a one-way trade worth pounds 1bn

John Shepherd
Tuesday 12 April 1994 23:02

BOOTLEGGERS are making more than pounds 22m a year by running van- loads of alcoholic drinks across the Channel, Whitbread, the UK brewer, claimed in a survey published yesterday.

The study, Cross Channel Shopping - The Facts, says that the effects from bootlegging and from legal shipments are felt throughout the UK.

Only 21 per cent of the pounds 1bn worth of beers, wines and spirits brought across the Channel is reckoned to be destined for the Carlton and London television regions. The Meridian and Anglia TV regions each account for 14 per cent, while Yorkshire and Tyne-Tees account for a combined 9 per cent.

In total, the loss of sales for every supermarket, off-licence and licensed outlet in Britain is estimated at pounds 20,000 a year. That equates to pounds 359m of beer, pounds 304m of table wine, pounds 201m of spirits, pounds 161m of sparkling wine and pounds 11m of fortified wine.

Whitbread's survey is the latest of several from the drinks industry in a concerted push to persuade the Government to reduce UK excise duty rates, which are among the highest in Europe.

Simon Ward, strategic affairs director of the brewer, pub operator and food retailer, said: 'We think the Government needs to reduce duty by half, equal to 15p per pint. That would be enough to deter the illegal trade and day-trippers.'

While he admitted that the imbalance in taxes was good news for the British consumer, he said: 'We are advocating a reduction in duty so everyone can benefit. If the Government were to make a reduction in duty, we would reduce the retail price of beer by that amount and pass it all on to the consumer.'

As part of its campaign, Whitbread has produced a graph which, it said, shows that reductions in duty lead to higher consumption, and therefore increased revenue for the Treasury.

Duty receipts fell by 50 per cent over the 12 years following a 27 per cent duty increase in 1947, it pointed out. Beer consumption in that period fell from nearly 34 million to 25 million barrels, or from 9.8 billion to 7.2 billion pints. Consumption then recovered to more than 40 million barrels by 1980 before the Government doubled duty and increased VAT from 8 to 15 per cent.

(The graph does not show correlations between consumption and demographic, employment or wealth patterns, or by how much brewers themselves have increased the price of beer.)

What was clear, according to Whitbread, was that the most recent increase in taxation on alcoholic drinks had tested the laws of diminishing returns. An 8.4 per cent increase in duty rates in 1992 yielded a 2.2 per cent rise in tax revenues.

Estimates of the lost revenue to the Treasury from personal and illegal imports of drinks last year extend to pounds 470m - almost double the amount in 1992 before the relaxation of Customs quotas. Personal imports of beer are now said to exceed 1.25 million barrels, representing 3.5 per cent of the UK market. The two months before Christmas witnessed a doubling in personal imports compared with the summer months.

Cheap ferry fares, particularly in the winter, have exacerbated the problem. Stena Sealink Line said recently that total passenger traffic on its Dover-Calais ferries leapt by 10.5 per cent to 6 million in 1993.

Undercover operations by the Brewers & Licensed Retailers Association has provided evidence that bootlegging is a highly organised affair. Customs has made some big seizures, including 34,000 litres in both Manchester and Birmingham and 20,000 in Hull and Leeds.

(Graph omitted)

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