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Last Updated:  Wednesday, 9 April, 2003, 16:02 GMT 17:02 UK
Sparkling budget for cider drinkers

There has been a mixed reaction to the chancellor's decision to increase duty on beer, wine and cigarettes, which some industry bodies say will fuel Britain's smuggling problem.

Gordon Brown added duty of one penny to a pint of beer, four pence for a bottle of wine and eight pence to a packet of 20 cigarettes.

The duty on cider and sparkling wine will be frozen as will the duty on spirits, for the sixth Budget in a row.

The Campaign for Real Ale (Camra) criticised the beer price increases, describing it as a flawed strategy.

"As people only have so much cash to spend in pubs and bars, increasing duty reduces average consumption which in turn reduces revenues from beer duty," said Mike Benner, Camra's head of campaigns and communications.

Cross-border differences

The Wine & Spirit Association echoed the disappointment.

This increase will only invite more smuggling and leave shopkeepers facing an uncertain and bleak future
Audrey Wales, Tobacco Alliance

It said the increase in a bottle of wine translated into a 3.5% rise, 1.2% above inflation.

"It is scandalous that duty on wine has still been increased... when the British drinks industry has suffered so much from cross-border shopping, smuggling and fraud," said Jo Williamson, chairman of the Wine & Spirit Association.

The association added that while the freezing in spirit duty was welcome, it had hoped for a gradual cut in duty to allow Britain to compete with its European neighbours.

"Most other high tax countries have been lowering their duty rate to reduce cross-border differences," said Mr Williamson.

Drinkers' loss

Spirits groups were less critical.

The Scottish Whiskey Association described the freeze on spirits as "another major step" towards a fairer tax system for the industry.

Drinks analysts also suggested the rises in wine and beer duty would be felt more by drinkers than producers.

"The duty increases...were negligible and will most likely be passed on to consumers with very little impact on sales, " said Nigel Popham, a leisure analyst at Teather & Greenwood.

Contraband fears

Shopkeepers lamented the duty increases, particularly the decision to raise cigarette duty.

Audrey Wales, national spokeswoman for the Tobacco Alliance - which represents more than 21,000 independent retailers in the UK - said:

"Once again, the government has provided a boost for criminal tobacco smugglers at the cost of small, independent shopkeepers.

"This increase will only invite more smuggling and leave shopkeepers facing an uncertain and bleak future."





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