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Proposed alcohol tax reform in the United Kingdom: Implications for wine-exporting countries

Published online by Cambridge University Press:  05 September 2022

Kym Anderson Open the ORCID record for Kym Anderson [Opens in a new window]  and
Glyn Wittwer
Kym Anderson*
Affiliation:
Wine Economics Research Centre, School of Economics and Public Policy, University of Adelaide, Adelaide, SA, Australia Arndt-Cordon Department of Economics, Australian National University, Canberra, ACT, Australia
Glyn Wittwer
Affiliation:
Centre of Policy Studies, Victoria University, Melbourne, Vic, Australia
*
Corresponding author: Kym Anderson, email: [email protected]
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Abstract

A proposal to reform the United Kingdom's excise duty on alcohol is under consideration during 2022. The proposal would change the tax base from volume of product to volume of alcohol, which would see a fall in the tax on sparkling wine (by about one-fifth), a rise in the tax on fortified wines of 18% alcohol by volume (ABV) (by about one-sixth), and table wines with more (less) than 11.5% ABV would become dearer (cheaper). With taxes on most beers unchanged and taxes on spirits lowered slightly, the pattern of UK wine consumption and imports would alter considerably. This article draws on a global model of national alcoholic beverage markets to estimate the likely bilateral trade effects of this proposed reform to UK excise duties. It compares them with the trade effects of the United Kingdom's first two bilateral free trade agreements (FTAs), following the post-Brexit EU–UK Trade and Cooperation Agreement, which allows Australian and New Zealand vignerons tariff-free access to the UK wine market. Those two FTAs are estimated to cause the United Kingdom to import far more wine than is lost by the proposed changes in UK excise duties.

Keywords

alcohol excise dutyglobal beverage market modelingwine alcohol levelswine export competitionF14F17H21Q18
Type
Article
Information
Journal of Wine Economics , Volume 17 , Issue 2 , May 2022 , pp. 117 - 126
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press on behalf of American Association of Wine Economists

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References

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