ThePortForum.com

Fellow Port Drinkers,

You should read this document...

https://assets.publishing.service.gov.u ... _FINAL.pdf

...and, submit evidence in reply to it. This is a serious business which may significantly change the way our beloved interest is taxed so please consider. Individually (and possibly collectively) we should comment.

My own initial thoughts, on which I invite comment on this thread.

Given that the intention is to maintain the current £12bn of alcohol levy:

(a) alcohol should be taxed in a simple, comprehensible, and uniform way;

(b) the different regimes for spirits, wines, beer and cider should be abolished;

(c) the most appropriate way to tax alcohol, given that the harm in alcoholic drinks is primarily caused by the alcohol, is to tax the alcohol content of alcoholic liquids exposed for sale on a £X per litre basis (subject to (g) and (h) below);

(d) banding would be acceptable to achieve a simplification of this [0-1; 1-3; 3-5; 5-7; 7-9; 9-11; 11-13; 13-15; 15-17; 17-19; 19-21 etc.] but may not be necessary given the ability of modern technology accurately to measure alcohol at bottling;

(e) whatever method is adopted there should be an exemption of liquids below 1% like orange juice and low-alcohol beer;

(f) because of the difficulty and expense of collection there should continue to be:

(i) exemption for home production of fermented (but not distilled) products for personal use; and

(ii) exemption for commercial sale of fermented (but not distilled) products per producer of less than 100l of alcohol content offered for sale per year;

(g) ad valorem is tempting as a method of raising revenue, but potentially deeply worrying from a public health point of view, as it wil drive e.g. wine drinkers to cheap high strength product;

(h) a strength escalator (say 1.5 over 12.5% 2.0 over 25%, and 3.0 x over 50%) would be acceptable on health grounds, but should not be abused by government to raise revenue;

(i) a tax distinction based on place of retail is unsupportable because it would conflict with the health hypothesis, and woud introduce complexity and an obvious opportunity for fraud and abuse;

(j) modelling will be required, but my guess is the current levy result is likely to be maintained by a simple alcohol levy of circa £35 per litre of alcohol taking the (c) approach above

(k) CPI indexing of a uniform alcohol duty would seem reasonable. RPI is outdated.

(l) monthly reporting and payment of duty across the alcohol production regime would seem appropriate.

This is very interesting. I’d like to have a proper read of the consultation before commenting properly.

A few initial thoughts:

a) An exemption for ABV under 1% doesn’t sit very well into the current licensing structure which uses 0.5% at the cut for the the definition of “alcohol” (s.191(1)(a) Licensing Act 2003); it is also more generous than the current duty regime for beer (which is 0.5% see s.1 Alcoholic Liquor Duties Act 1979), although less generous than that for wine and spirits (which is 1.2%, ibid). Of course, there is also the 0.05% below which you can call your drink “alcohol free” under Schedule 8 of the Food Labelling Regulations 1996 and similar provisions about when you have to put the ABV on the bottle at 1.2%. It’s a real mess.

If I had a blank piece of paper, I would just choose a cut-off for all purposes* at, say, 1%. Below that it would be exempted for all purposes. Above that you are subject to licensing, duty and labelling requirements.

[* save the designation of “alcohol free”]

I note this would preclude my plans of opening a completely unlicensed cocktail bar serving Angostura-bitter-based cocktails like the Angostura Sour to toddlers but that is a price I am willing to pay.

b) I have considerable sympathy with the Swedish model of incentivising the production of low-alcohol beer. I think their system is rather complex but, in essence, you don’t pay duty on beer under 2.8% and don’t pay VAT on beer under 2.25%. I would like to see more brewers produce lower-but-still-alcoholic beers, to encourage more social pub drinking and to stem the tide of ever-rising ABVs. I think there is a strong argument for giving them a big duty discount at about 3% to encourage them to do so.

c) Whilst I can understand the attraction in treating all alcoholic drinks the same, I also think it is proper for the duty system to encourage under performing UK industries. For example, if we get rid of the current lower duty rates on cider and perry compared to beer, are we not going to kill them off altogether? I appreciate that free-marketeers might not like this, but I also have sympathy with the suggestion that domestic wine should be discounted too, to help stimulate that industry. I’m sure the French would go even further if our beer tradition was theirs and have huge discounts on real ale!

Because it's late, dealing exclusively with your (c) (i) We will not kill cider and perry by equalising duty rates. A. Cider and beer are not interchangeable at alcohol levels high enough to make a cash difference. B. The duty is (in pub terms) an irrelevant amount even if you are running an bright orange Cheddar Gorge at 9%. (ii) I understand that for trade reasons lower duty rates on domestic product are Simply.Not.Going.To.Happen.Don't.Even.Ask.

Worth mentioning here:

Responses to the call for evidence should be submitted to [email] no later than 23:59 on 29 November, using the provided template published alongside this document on the GOV.UK website. Regretfully, the Government is not able to consider responses that are submitted in any other way (e.g. sent in the post in hard copy form). If respondents are unable to meet this deadline, they should contact the review team using the email above to seek an extension.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(a) alcohol should be taxed in a simple, comprehensible, and uniform way;

This would be the ideal. Will foreigners (EU) arrange their tax system fairly, or will it somehow benefit them? Their demands in the trade negotiations have been quite asymmetrical: assuming goodwill would be foolish.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(c) the most appropriate way to tax alcohol, given that the harm in alcoholic drinks is primarily caused by the alcohol, is to tax the alcohol content of alcoholic liquids exposed for sale on a £X per litre basis (subject to (g) and (h) below);

Travel miles are bad for the environment. Sugar is alleged to be unhealthy.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(e) whatever method is adopted there should be an exemption of liquids below 1% like orange juice and low-alcohol beer;

Agreed.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(f) because of the difficulty and expense of collection there should continue to be:

(i) exemption for home production of fermented (but not distilled) products for personal use; and

(ii) exemption for commercial sale of fermented (but not distilled) products per producer of less than 100l of alcohol content offered for sale per year;

Agreed — assuming the 100 litres is of pure alcohol.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(g) ad valorem is tempting as a method of raising revenue, but potentially deeply worrying from a public health point of view, as it wil drive e.g. wine drinkers to cheap high strength product;

Indeed, ¶4.10 seems to contemplate the opposite:

¶4.10 on p30 wrote:One argument in favour of retaining different alcohol duties is that different products contain different risks of alcohol harm, and these are not always directly linked to the strength of the product. For example, if a product is cheaper to produce, the final sales price will be inherently lower than a product of the same strength which requires a very labour-intensive process. This would make it more accessible and therefore easier to abuse, independent of the amount of alcohol.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(h) a strength escalator (say 1.5 over 12.5% 2.0 over 25%, and 3.0 x over 50%) would be acceptable on health grounds, but should not be abused by government to raise revenue;

When you said “should not be abused by government to raise revenue”, how great was your long-term optimism?

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(i) a tax distinction based on place of retail is unsupportable because it would conflict with the health hypothesis, and woud introduce complexity and an obvious opportunity for fraud and abuse;

I also prefer the simplicity of a per-unit alcohol tax. But pubs are dying — the government can at least pretend not to be callous.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020(k) CPI indexing of a uniform alcohol duty would seem reasonable. RPI is outdated.

Agreed.

winesecretary wrote: ↑21:51 Sat 10 Oct 2020Individually (and possibly collectively) we should comment.

Individual responses encouraged.

The collective is less obvious to me. There is no ‘ThePortForum’ legal entity. There is no body, nor is there a Chief anything. Perhaps ‘collective’ meant that if an opinion is held by several of us, those several could write together.

Julian, you raise many interesting points, and I need to think particularly about food miles and sugar content (albeit additional levies on the latter would prejudice this group).