VAT rises push up tax on wine
The new VAT rate of 20% came into effect this week, increasing the tax on wine and other alcoholic drinks. On a £5 bottle of wine the VAT is now £1 and when you add alcohol duty, currently at £1.63 per bottle, the total taxes account for 52% of the price. On a £4 bottle its a whopping 61%. Spend £10 and the tax is a more palatable but still high, 36% of the overall cost of wine.
The British Beer & Pub Association think the new 20% VAT rate will hit the on-trade harder than the take-home market, pushing the average pint of beer through the £3 mark for the first time. The organisation said supermarkets would be better placed to absorb the impact of the VAT increase, which is intended to raise an extra £13 billion in revenue for the government. Some retailers have pledged to keep prices at original levels to help cash-strapped customers but a poll by the British Retail Consortium found that 80% of retailers believe the VAT increase will hit sales this year.