Kwarteng scraps planned tax increase for beer and wine


Kwasi Kwarteng scrapped a planned alcohol tax hike in his mini-budget when he planned billions of pounds in tax cuts and more loans.

In a statement to the House of Commons on Friday, the chancellor said planned tax increases on beer, cider, wine and spirits will all be cancelled.

It comes after Rishi Sunak, the former chancellor, announced in February that he would tax drinks based on their alcohol content. Industry experts warned that this alone would have cost wine drinkers up to £300m extra in spending.

The changes would come into effect on February 1 next year.

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But the new chancellor said he had “listened to industry concerns” about the changes and promised to introduce an 18-month transitional measure for wine taxes.

“Our push to modernize extends to alcohol taxes as well,” he said. “I will also be expanding the strain relief to smaller barrels of 20 liters and above, to help smaller breweries.

“And in this difficult time, we’re not going to let the alcohol tax increase in line with the RPI.”

The excise tax on alcohol usually rises in line with the retail price index, which stands at 12 percent and is linked to inflation, which is currently at 9.9 percent but is expected to rise.

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The current level of RPI is the highest since the 1980s.

According to the Treasury’s analysis, the move amounts to £600m in tax cuts, saving consumers 7p on beer, 4p on a pint of cider, 3p on a bottle of wine and £1.35 on a bottle of spirits.

In his statement, which the government described as a “tax event”, Mr Kwarteng also abolished the highest income tax rate for the highest earners as he spent tens of billions of pounds trying to boost growth to reduce the cost of livelihood reduction crisis.

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He scrapped the 45 percent higher income tax rate and brought forward the planned reduction of the base rate to 19 pence a year in early April.

He also revealed his estimate that the energy bill bailout will cost around £60 billion over the first six months from October.


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