Proposed alcohol tax reform in the United Kingdom: Implications for wine-exporting countries

A proposal to reform the United Kingdom's excise duty on alcohol is under consideration during 2022. The proposal would change the tax base from volume of product to volume of alcohol, which would see a fall in the tax on sparkling wine (by about one-fifth), a rise in the tax on fortified wines...

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Bibliographic Details
Published in:Journal of wine economics 2022-05, Vol.17 (2), p.117-126
Main Authors: Anderson, Kym, Wittwer, Glyn
Format: Article
Language:English
Subjects:
Alcohol
Alcoholic beverages
Beer
Beverages
Consumers
Exports
Free trade
Imports
International cooperation
International trade
Sparkling wine
Spirits
Tariffs
Tax reform
Taxes
Trade agreements
Wines
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Summary:A proposal to reform the United Kingdom's excise duty on alcohol is under consideration during 2022. The proposal would change the tax base from volume of product to volume of alcohol, which would see a fall in the tax on sparkling wine (by about one-fifth), a rise in the tax on fortified wines of 18% alcohol by volume (ABV) (by about one-sixth), and table wines with more (less) than 11.5% ABV would become dearer (cheaper). With taxes on most beers unchanged and taxes on spirits lowered slightly, the pattern of UK wine consumption and imports would alter considerably. This article draws on a global model of national alcoholic beverage markets to estimate the likely bilateral trade effects of this proposed reform to UK excise duties. It compares them with the trade effects of the United Kingdom's first two bilateral free trade agreements (FTAs), following the post-Brexit EU–UK Trade and Cooperation Agreement, which allows Australian and New Zealand vignerons tariff-free access to the UK wine market. Those two FTAs are estimated to cause the United Kingdom to import far more wine than is lost by the proposed changes in UK excise duties.
ISSN:1931-4361
1931-437X
DOI:10.1017/jwe.2022.19