Diageo Calls For Overhaul On UK Drinks Tax

by Amanda Banks, Tax-News.com, London

03 September 2010

Drinks giant Diageo has joined the debate on alcohol tax reform in the UK by suggesting that all drink types should be taxed at the same rate.

The company, which owns Smirnoff, Jonnie Walker and Guinness argues in a submission to the Treasury that spirits are being penalized under the current system, and the firm proposes that all forms of alcohol should be brought up to the 23.8p levy on spirits. This could help the government raise an additional GBP1.9bn in tax revenue.

"Alcohol is alcohol and we believe that people should know they are paying the same tax per unit whether it is a pint of Guinness, a glass of Blossom Hill or a glass of Johnnie Walker,” said Simon Litherland, managing director at Diageo Great Britain.

"Our recommendation to the Treasury is the fairest and most transparent way to approach taxation of alcohol, it will bring revenue to the government and will mean that the more alcohol in the drink, the more tax it will pay.”

Diageo has also challenged the common stance that 'alcopops' or ready to drink (RTD) products are the cause of problem drinking. Evidence from a police enforced crackdown last year revealed beer was the most commonly seized item (70%), followed by cider (15%). Only 5% were RTDs.

Diageo argues their equalized excise tax system would ensure that all alcohol is taxed according to strength, eliminating the need to impose extra taxes and discriminating against specific drinks, such as RTDs.

The government is expected to reach a decision on the issue by the end of 2010.

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