At Mark's invitation - and a brief overview of an extremely complex subject:
Cider duty is required by EU Directive (92/83/EEC) to be banded, like wine and fortified products, while beer and spirits duties are required to vary directly with ABV (or, in the case of beer only, by reference to 'categories' of no more than 4 degrees Plato - this is why beers in some EU member states, I think eg: Italy and Greece, are classed). In the UK beer and spirits duties are charged at their different rates in £ per unit volume per 0.1% ABV.
Cider is charged per hectolitre (hl) in 2 bands (>1.2% - 7.5%abv and >7.5% - <8.5%abv). There is also a special class of sparkling duty (>5.5%abv and >3bar CO2 pressure) - See HMRC Notice 162 for details (163 for wine).
Since the 1920s and until 01/09/76, cider in the UK was not dutiable but paid Purchase Tax, other alcoholic drinks did not. The overall tax effect was then similar. On the change from PT to VAT (a typically intellectual French concept for indirect taxation - this probably explains why we do not use the simple pragmatic sales tax approach of PT, but that's another story...) on the 1973 accession of the UK to the Common Market, as it was then, cider was not taxed for 3 years until September 1976 when an excise of £0.22 per gallon was imposed. This corresponded to 40% of the average duty on beer (at O.G. 37.3) at the time.
Brewers producing <60,000 hl p.a. have recently enjoyed a progressive rate of tax from 50% of the national rate upwards. This is specifically permitted by the Directive - indeed, brewers of up to 200,000 hl p.a. can do so but the UK has settled at the 60,000 limit. This is said to correspond to the UK cider maker's 70 hl exemption (which is itself, strictly speaking, illegal under the Directive but is likely to be regularised in the next year or two).
By citing the particular differences between cider making and brewing, not least the need for full vertical integration in cider making (growing apples to delivering finished product) and the high degree of commitment and single-use investment needed, benefit to the rural economy, higher costs, lack of economy of scale, etc, NACM has made the case for maintaining the relationship of cider duty to beer duty at a lower level. The relationship has varied from 40% to as high as 55% in the early 90s. It has tended to be higher under Conservative Chancellors rather than Labour (but there have been more of the former). What this says about the future of cider duty - or indeed the colour of the next Government - remains to be seen!
With regard to the current position:
NACM is already fully engaged with the Treasury in reviewing the situation. I feel that there will be some change to the cider system since it is now as much a political matter as a technical one. NACM is committed to seeking the best outcome for all sizes and types of UK cider maker and we do have a full understanding of the position of each. We are waiting for an indication from HMT of the scope and ground rules of the enquiry announced in the PBR.
We object to cider duty being used by some in order to argue for lower duty on beer - the differential is justified by the arguments we have consistently cited.
With my EU trade association (AICV) hat on, I have been arguing consistently in EU Commission working groups for EU-wide special treatment of small traders that does not cause distortion (as the 70hl limit does) and that might apply to all drink sectors. This might be achieved, for example, by using an income-tax model of cumulative bands....
Hope this helps - and re-assures as much as possible.
Best wishes
Nick
-----Original Message-----
From:
cider-w...@googlegroups.com [mailto:
cider-w...@googlegroups.com] On Behalf Of Mark Shirley
Sent: 14 December 2009 23:08
To:
cider-w...@googlegroups.com
Subject: Re: [Cider Workshop] Early Day Motion about increasing duty on cider by 29p a pint.
> The Early Day Motion reads: "That this House notes that duty paid on a
> pint of 5% alcohol cider is 29p less than is paid on a beer of
> equivalent strength.
>
> It "further notes that the UK Treasury could raise Ł400m annually in
> additional revenue if cider duty were brought into line with beer
> duty".
Does anyone know why there is currently such a difference between the duty
paid on similar strength beers and ciders? From what I've heard on the
hopvine, most brewers are unhappy with the lower duty paid on ciders, and to
be honest, I find it difficult to argue against this view without knowing
what the reasoning is. Perhaps Nick would care to comment.
The duty exempt limit is much more easy to understand, and therefore
justify. I feel confident discussing this with beer-ophiles and my opinion
is that all producers should benefit from a similar exemption, particularly
wine makers and micro brewers.
Mark
http://rockinghamforestcider.moonfruit.com/
http://rockinghamforestcider.blogspot.com/
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