Push for smaller increase on booze dues

Thursday 02 December 2021

A group of politicians is urging the Government to slash its proposed increase on alcohol duty for wines and spirits from 5% to 2.5%.

While the Corporate Services Scrutiny Panel's plan would see the amount collected by the Government in Impôt Duties for Spirits, Wine, Cider and Beer reduce by £231,000, the group say the move would help the island’s economy continue to recover from the “disproportionate impact of the pandemic”.

The proposed Government Plan 2022-25 includes an Alcohol Duty freeze on all strengths of beer and cider, whilst increasing the duty on all wines and spirits by 5%. 

In a public hearing with the Panel, the Minister for Treasury Resources, Deputy Susie Pinel, indicated the 5% increase on wine and spirits was to compensate for the exclusion of beer and cider.

The Minister was not able to explain why it had been decided that beer and cider should continue to be frozen. When questioned on the potential impact on the hospitality sector, she said it would be negligible.

Pictured: Deputy Susie Pinel, the Minister for Treasury Resources, said the increase on wine and spirits was to compensate for the exclusion of beer and cider.

However, Claire Boscq, the Chief Executive of Jersey Hospitality Association (JHA), wrote to the panel to voice concerns about the proposals as she set out many of the association’s members are “heading into what is effectively a fifth winter season in a row”.

“We are concerned to see that once again, the Government is planning to increase the excise duty on alcohol,” Ms Boscq wrote. “The industry has endured several years of damaging duty increases, and due to the pandemic, businesses have faced what is effectively five winter seasons in a row.

“…The JHA firmly believes any increase in duty will further increase the costs of doing business at a time when the pandemic is still having an effect. The JHA is also concerned that pushing up the price of duty-paid spirits will encourage more people to purchase the cheaper Duty Free alternatives, especially as the restrictions on travel are eased. This will also have an impact on the amount of revenue the Government will expect to make from the excise charged on duty-paid sales.”

Pictured: The Panel said the duty reduction would as "additional economic assistance" to hotels, restaurants and bars who have been hardest hit by the pandemic.

In the report accompanying their proposition, the Corporate Services Panel said their amendment sought to “level” the increase across all alcohol “to keep the duty broad simple and fair”.

“The Panel is sympathetic to the impact that this will have to parts of the island’s economy recovering from disproportionate impact of the pandemic, as such believes that a rise of 1% below June 2021 inflation should be implemented,” they added.

The Panel said it was conscious of the impact any increase in Alcohol Duty would have upon those selling and consuming, as well as aware of the need to “weigh up the balance of revenue raising, economic support and public health measures”.

They argued that their proposals to halt the freeze of duty on beer and cider to bring a level Alcohol Duty increase of 1% under the Retail Prices Index (RPI) inflation to June 2021, was “a reasonable compromise” between both elements.

They added that the decrease in alcohol duties could be met by reducing the allocation to the general reserve.

“Although slight, this decrease will act as additional economic assistance to those sectors hit most by the pandemic, for example hotels, restaurants and bars which saw a 45% contraction of the Gross Value Added in 2020,” the Panel wrote. “This negative outlook for the hospitality sector can be seen in the September 2021 Business Tendency Survey, for who profitably and future business activity is pessimistic.”