Clause 3 — Rates of Duty on Wine and Made-wine

Finance (No. 2) Bill – in the House of Commons at 4:30 pm on 6th April 2005.

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Question proposed, That the clause stand part of the Bill.

The First Deputy Chairman:

I call Mr. Michael Fallon—I mean Mr. Michael Jack.

Photo of Michael Jack Michael Jack Conservative, Fylde 4:45 pm, 6th April 2005

That is the second time today that my name has not been called correctly, but perhaps it will be third time lucky.

Can the Minister satisfy my curiosity about the relative rates of duty per hectolitre on the wines described in the clause. The table in the clause starts with a reference to the percentage of alcohol by volume of the wines that are subject to the tax, so I conclude that the principal purpose of the clause is to tax the alcoholic content of the wine. However, I note that the duty rate on still wine—

"Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent"— is £167.72 a hectolitre. I also note that within that category a wine that might be partially fermented—it would have the name frizzante, for example, if it was Italian—would be taxed at that rate and not at the much higher rate of £220.54 a hectolitre on wine that is fully sparkling.

It might be argued that that covers the majority of champagnes, for example, which are more expensive and could stand a higher rate of duty. However, the spumante-type sparkling wines and the cremant de Loire are lower-priced wines but have an alcoholic content of around 12 per cent. and seem to bear a disproportionately high rate of duty compared with the more expensive champagne-type wines and certainly more expensive than a wine with a higher alcoholic content in the first category that I mentioned. The rate of duty per hectolitre seems to be irrational if the duty rate relates to the alcohol content of the wine.

Those of us who enjoy wine and occasionally venture to sparkling wine—I am thinking of those of us who will want to celebrate the Conservative victory in the election on 5 May—would like a clear explanation of the duty rate differentials.

Photo of Stephen Timms Stephen Timms The Financial Secretary to the Treasury

The Bill uprates the duty on still wine by 2.6 per cent., but there is a freeze on the duty on sparkling wine. The industry has argued for the differential between sparkling and still wine to be eliminated and by uprating the duty only on still wine we have narrowed that differential because the rate of duty on sparkling wine is unchanged. The hon. Gentleman's point is a reflection of historic development over an extended period. We believe that it is right to narrow the differential and that is why there is an increase in the duty on still wine but not that on sparkling wine.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.