Ministers are facing calls to spare wine lovers more misery amid the cost of living crisis by amending a duty overhaul.
Producers are warning consumers will have to pay up to an extra pound on some of the most popular brews as inflation soars.
The Treasury consulted on the duty rate reforms that were announced by Rishi Sunak last year, basing the charges on strength.
The proposals – which could be finalized within weeks and come into force next year – would see small price reductions on draft beer and cider, as well as the removal of a super-tax that applies with sparkling wine, prosecco and champagne.
But the wine industry has warned that the changes will come at a cost to those who enjoy bottles with an alcohol level – or ABV – above 11.5%. The plans have been criticized as too complex because they set narrow bands of 0.5% for a drink’s ABV, which in wine is difficult to manage with precision.
The government is now facing final calls to relax the rules, with Australian producers saying they are at a disadvantage because environmental factors – such as soil and types of grapes – tend to make their wine stronger.
Producers warn consumers must pay up to an extra pound on some of the most popular wines as inflation soars and new rules on tariffs are set to come into force
Wine producers have warned that the costs of some of their most popular products are set to rise
Treasury Wine Estates (TWE), Australia’s biggest supplier to the UK, said duties on its products are set to rise by 10%.
He predicted that bottles of Lindeman’s Shiraz, which sell for £7.25, could cost 58p more as a result. Accolade wines are also facing rises, with Hardys Crest Cabernet Shiraz Merlot potentially up £7-£8.
To offset the impact, the company has proposed widening the price brackets from 0.5% to 1% for wines with an ABV between 8.5% and 22%.
He says the move would make it easier to manage alcohol content to keep products within lower bands.
The industry also wants bottles to be taxed according to the ABV levels on the labels when they arrive in the UK rather than being retested – arguing this would make the process more controllable and efficient.
Tony Battaglene, chief executive of industry group Australian Grape and Wine, said: “It is unfortunate that the results of the free trade agreement are directly affected by this tax.”
“Under the new system, 93% of wine exported from Australia will be affected and the cost to Australian winemakers is estimated at A$143 million.
“While we accept the UK government’s sovereign right to change its tax system, UK consumers are the big losers.
“One of the benefits of a free trade deal was supposed to be more affordable Australian wine – that won’t be the case under the government’s current proposal. UK consumers will pay more for their favorite bottle of Australian wine.
Rishi Sunak (pictured yesterday) announced the liquor tax overhaul in last year’s budget
A UK Treasury spokesperson said: ‘Our reforms will replace our outdated rules with a common sense approach which puts the taxation of stronger beers, wines and spirits on an equal footing, making lighter and sparkling wines more affordable for British drinkers.
“This is on top of the alcohol duty freeze in the last three budgets, saving consumers a total of £5.7 billion.”
Asked about future duty reforms in the House of Commons earlier this week, Treasury Minister Helen Whately said: ‘We have set out our plans to make alcohol duty simpler and fairer – a change which is long overdue.”
“This includes new relief for draft beer, relief for small producers for craft cideries and the end of the higher rate for sparkling wine.
“I listen to the sector and have visited companies to hear for myself, to make sure the reforms are working in practice.”