(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
4:30 pm
Mr Michael Jack (Fylde, Conservative)
I begin by welcoming you to the Chair, Mr. Benton. You were absent this morning for the beginning of our proceedings, but tribute was paid to you in your absence. It is nice to be able to do that in your presence. I also acknowledge the Economic Secretary, who is with us this afternoon—a change in Front Bench talents. I have no doubt that we shall enjoy what she has to say.
Before the luncheon interval, we were debating the amendments tabled by my hon. Friend the Member for Christchurch (Mr. Chope). I wish to address the remainder of my remarks to amendment No. 1, which properly asks for more information to be provided to Parliament about the taxation of alcoholic beverages. Just before the break, I was discussing what appears to be a new taxation principle employed by the Treasury and by Customs and Excise of considering what the market will bear. The explanatory notes indicate that the duty on alcopops was increased because it was thought that, as a proportion of the retail price, it was too low for a spirit-based designer drink. The explanation would have been a little more straightforward if the notes had simply said that the Treasury had decided that it was time that the taxation on that spirit-based drink fell into line with other spirits. However, they did not say that but described a new way of determining policy.
The explanation has flushed out some inconsistencies in the way that alcohol per se is
taxed. For interest's sake, I asked for the assistance of the Library of the House to draw up a comparison on a common denominator basis of the way in which different alcoholic beverages are taxed. The Library converted tax into the common denominator of pounds per litre of alcohol. We find that spirits will bear a duty of £19.56 per litre after the measure in the clause comes into play. However, wine with 15 per cent. alcohol content bears a duty of £10.31 per litre of alcohol. A less alcoholic wine by volume bears a tax of £15.47, and beer bears a tax of £11.89. There appears to be a delicious inconsistency in the way that alcohol is taxed, when compared on a like-for-like basis. The amendment gives Treasury Ministers an opportunity to address the inconsistencies.
Paragraph 6 of the explanatory notes refers to the medical implications of a large consumption of alcopops, but the tax on beer will, effectively, be nearly half the now-enhanced rate of taxation on alcopops. If there were genuinely a health case to be made, why not have an equivalence in the tax on alcohol? If we are to understand the logic behind the measure, we need an explanation, and amendment No. 1 provides an opportunity to get one. I look forward to hearing Ministers explain both why there are different rates and why the numbers are what they are, which will allow us to understand the inconsistency in the way in which alcoholic beverages are taxed in this country.