In the last year alone, European consumers have faced increases in excise tax rates on spirits in 15 EU countries. Therefore, the decision taken earlier this week by the UK government to scrap the alcohol duty escalator and freeze excise duty on spirits is very good news.
The voices of consumers and businesses have been heard. In practice, it means that planned increases of 4.5 per cent in excise duty will not now be imposed.
In 2008, the British government installed an automatic tax increase of two per cent above inflation to increase duties on alcoholic beverages. The mechanism was called the alcohol duty escalator and the annual escalator rises since 2008 means that 79 per cent of an average priced bottle of spirit drinks in the UK is tax (i.e. representing a 44 per cent duty increase on spirits).
"The decision taken earlier this week by the UK government to scrap the alcohol duty escalator and freeze excise duty on spirits is very good news"
The escalator was scheduled to be in force until 2015 but already last year, the duty escalator was abolished for beer - a move perceived as unfair, and discriminatory against competing wines and spirits.
There have been additional good reasons put forward to convince the British chancellor of the exchequer.
Ernst and Young carried out an independent assessment of the impact of the alcohol duty escalator on the industry and the potential benefits of scrapping it in 2014.
That report showed that simply by removing the escalator the British government could provide the industry with the environment it needs to grow strongly, create jobs and make a greater economic contribution to the country's economy.
It anticipated the creation of 6000 new jobs, the generation of an extra £230m for public finances and additional economic activity of around £1bn if the escalator was scrapped, all in 2014.
These arguments are as valid for other EU countries. The map below shows the current imbalance in taxes between the different types of beverage.
We urge a fairer and equitable tax treatment throughout Europe.