(Except clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and schedules 1, 5 and 38) - Clause 3 - Duty on beverages made with spirits to be at spirits rate
Finance Bill
4:45 pm
Mr Paul Boateng (Financial Secretary, HM Treasury; Brent South, Labour)
I shall not be drawn into such discussions now, but I hope that we have an opportunity later to discuss wines and their respective proportion of tax. Now, we are dealing specifically with spirits-based coolers.
Recent evidence strongly suggests that the sector enjoys sustainable levels of growth and very low demand elasticity, but even so, the assumptions that we made about growth and demand in our revenue projections were cautious. One has but to listen to the firm of market analysts WestLB Panmure, which said:
''We do not believe that the higher tax and higher prices will materially affect demand because we do not believe that demand is price sensitive but led more by brand preference.''
People are attracted by brands, such as WKD, Reef, Barcardi Breezer and Smirnoff Ice. As Opposition Members have said, they are fashion drinks. People's decisions in relation to fashion are not often based on price elasticity. They pay for a name—surprising but true.