EU can save us from Chancellor’s wine tax

In last week's budget the duty on wine went up yet again. Our beloved Chancellor said that the 2 per cent increase would mean "an extra 4p" on a bottle of wine. Strictly speaking, he was telling the truth, but he omitted to mention that VAT is payable on the increased duty, and because all retailers calculate their margins on their total cost, the real increase will be closer to 10p a bottle in a shop, 20p in a pub and 30p in a restaurant.

Duty on wine is a flat rate (now £1.61 a bottle) so, of course, it hits cheaper wines harder than expensive ones. It means that with a £3.99 bottle, you are really only buying about 20p's-worth of wine (taking into account the cost of the label, bottle, cork, transport, the retailer's margin and, of course, VAT). At £7.99 it is well over £2-worth, so it's fairly obvious where the better value lies.

With the newspapers reporting that 40 pubs a week are closing and the restaurant trade is in dire straights, this news will certainly not help matters. A trip to Calais for your wine and champagne becomes even more worthwhile. And incidentally, France is now the biggest market in the world for Scotch whiskey, where it is about £3 a bottle cheaper than it is here!

The extra tax may at least help curb middle-class, middle-aged binge drinking, which must have been the Chancellor's intention as there is surely no other sound reason for his actions (this tax increase will actually lead to a reduced total revenue for the government as wine sales decline, so whoever does the maths in the Treasury appears to have got it wrong).

Some of our past Chancellors would have been much more sensible - Winston Churchill drank Pol Roger champagne nearly every day; Roy Jenkins was known for his love of Claret and Ken Clarke looks like the sort of fellow you would find in your local pub.

When the government signed the Treaty of Rome in 1957, they agreed to harmonise our excise duties on wines and spirits with the rest of Europe. Successive governments have conveniently ignored this. If it were to happen, wine prices would fall by at least £2 a bottle - and we would all be very happy. ·