Wine Duty. Iniquitous?
How about a definition? Iniquitous: adjective /ɪˈnɪk.wɪ.təs/-t ̬əs/ formal, definition; very wrong and unfair. This is the perfect description of the tax we know as “duty”. You pay duty every time you buy an alcoholic drink in the UK. In last month’s budget duty went up again, as it did last year and the year before. In fact we are in the middle year of a five year “escalator” that annually increases duty by 2.5% above inflation. This year on every bottle of wine you buy you pay the Government a thumping £1.86 in duty, unless it is sparkling of course when it is £2.14. This is 13p more than last year. How does that compare to other EU countries? Well in France the figure is 5p, in Italy nil, Germany nil, Spain nil and pretty much all others nil too. But the really unfair thing about duty, the really iniquitous part, is that it is levied on the producer or importer of the wine, rather than the final retailer. This means that it becomes part of the cost of the wine and every business that handles the bottle puts their margin on top of the duty. If that is getting a bit technical look at an example. Say you decide to set up as a wine importer; nice lifestyle, lots of wine to taste, buying trips to France, etc, etc. So you pop over to Roscoff and buy a few bottles from a friendly Vigneron for €2 a go. That’s cheap wine but you’re a pretty good negotiator. In pounds that is about £1.75. You then pay the duty, £1.86; so the bottle immediately more than doubles to £3.61. Now, naturally you want to make some money, so you sell the bottle to a local wine shop for a reasonable 20% margin, ie £4.25. The shop needs a profit too so add another 25%, so now we are at £5.66. Now there’s another tax, VAT. This adds another 20%, so the €2 bottle you scored finally sells for £6.80. And out of that about £3 went to the Government as tax. If you were a Spaniard the same bottle would have sold for £3.50. Incidentally this explains why it is now hard to buy much drinkable wine under about £7 a bottle. The simple reason being that any lower than that and the poor producer gets next to nothing with which to make the wine. You might ask why this unfair, unreasonable and stealthy tax keeps going up? I think the answer is that drinkers are seen as a soft touch. It’s easy to claim that increasing the price of alcohol has health benefits and I can’t see many politicians campaigning to make wine cheaper. Iniquitous? I think so.