Clause 3 - Rates of duty on wine and made-wine
Finance Bill
10:00 am
Mr John Healey (Economic Secretary, HM Treasury; Wentworth, Labour)
We now turn to the rate of excise duty to be charged on wine and still-made wine. Clause 3 proposes an increase in the rate in line with general inflation of 2.8 per cent. Wine accounted for around 27 per cent. of total alcohol duty receipts, including VAT, of some £7.3 billion in 2002–03. As with beer duty in clause 2, it is an inflation-only increase in duty and VAT and equivalent to around 4p on a bottle of standard table wine. As with clause 2, it is necessary to maintain an important source of revenue to fund essential public services and Government spending. I should remind the Committee again that this modest increase—it is a freeze in real terms—comes after a period of actual freezes in wine duty in three of the previous four Budgets. Since coming to office in 1997, the Government, unlike the previous Conservative Government, have made no real-terms increases in wine duty.
The UK wine market continues to flourish, and sales of UK duty-paid wine are still increasing. They have increased by 56 per cent. during the past 10 years and remain buoyant with an increase of 8 per cent. during the year to December 2002. The wine share of the UK alcoholic drinks market increased from 21 per cent. in 1993–94 to 29 per cent. in 2001–02. We can look to the wine sector to help to maintain revenue without damaging its prosperity.
The arguments about smuggling and cross-border shopping are essentially the same as those made by the hon. Member for Eddisbury at the end of his remarks on clause 2. As I have made clear, the Government are committed to preserving people's rights to shop freely in the single market, but we are also absolutely committed to clamping down on smuggling. I am sensitive to the concerns of wine importers and native wine producers, but the modest increase—as I said, it is a real-terms freeze in wine duty—recognises those concerns while maintaining an important source of revenue to the Exchequer to help it maintain its public spending commitments.