Changes in Alcohol Duties: How Will They Affect Consumers?
As of today, there are significant changes in the way alcohol duties are charged in the UK. Previously, alcohol duties were based on the type of alcohol, but now they will be charged based on the strength of the alcohol. Additionally, duties will increase with inflation, which means that many drinks could now cost more for consumers.
Since August 2020, alcohol rates have remained frozen. However, starting today, duties on non-draught alcohol will be uprated by inflation, and these duties will reflect the alcohol content in the drinks. This means that the duty on still wine has increased by around 30% since 2015 and nearly 58% since 2010. Beer and spirits drinkers will also see an increase of 14% on 2015 duty levels, which is an increase of 21% and 33% respectively since 2010.
Stuart Adam, a senior economist at the Institute for Fiscal Studies, believes that these changes are a sensible reform. He states, “It’s not a tax increase overall, it’s increased some types of (alcohol) and reduced others which I think is a sensible reform. It’s now going to reflect more closely the alcohol content of different drinks, as it should.”
While the increase in draught relief may bring down some prices, the increase in duties on other products will still put pressure on pubs. Emma McClarkin, the chief executive of the British Beer and Pub Association, expresses concern over the impact of these changes on the industry. She says, “Today’s increase means beer duty is now the highest it’s ever been. The continued draught relief freeze is welcome to try and help pubs at the heart of communities across the country, but the fact remains that today’s changes will add £225m worth of costs a year across our industry and this will be felt at the bar.”
Changes in Tobacco Duties
While duties on many drinks have increased, tobacco has seen even bigger rises in duties. Since 2015, tobacco duty has increased by 56%, which is 26 percentage points higher than the increase in still wine in the same period.
From May 2017, the duty on cigarettes is either the specific duty per 1,000 cigarettes plus 16.5% of the retail price or the minimum excise tax per 1,000 cigarettes – whichever is higher.
Changes in Fuel Duties
Along with duties on recreational pastimes, there have also been changes in duties paid on fuel and travel. Fuel duty has decreased for various fuel types. Before 2022, fuel duty last changed in 2021 and March 2011 before that, but the duty rates stayed the same for leaded, unleaded, and diesel fuels. From March 2011 to 2022, fuel duty decreased by 7% for leaded fuels and 9% for unleaded and diesel fuels.
Changes in Air Passenger Duty
For people traveling by air, the standard Band A rate for air passenger duty (a journey of 0 to 2,000 miles) hasn’t changed since 2015, staying at £26.00. However, the standard Band B rate (2,001 to 5,500 miles) has increased by more than a third.
These changes in duties have significant implications for consumers. While some may benefit from the decrease in fuel duties, others will have to bear the increased costs of alcohol and tobacco. It remains to be seen how these changes will impact the overall economy and consumer behavior.
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