DUTY on alcohol may be increased at a steeper rate after the current cost-of-living pressures have eased, the Treasury Minister has indicated.
Deputy Elaine Millar told a Scrutiny hearing that years of freezes or below-inflationary rises in alcohol duty represented a “temporary measure” to reflect economic challenges experienced by many businesses and individuals.
The minister was asked about this topic during an appearance in front of the Corporate Services Scrutiny Panel to discuss her budget, and said that alcohol duty had been frozen or reduced below the rate of inflation for the past five years.
She said: “The decision to freeze was one of one of the government’s priorities.
“That turns out to be more difficult than you might initially think – alcohol and fuel duty are things [that] also feed in very directly to things like [the] cost-of-living crisis and inflation.”
Deputy Millar conceded that ministers had to achieve “a very difficult balancing act” between being aware of the potential for alcohol to contribute to poor health outcomes – causing a negative impact on healthcare budgets which were already overspent – and the impact on hospitality businesses.
“Our hospitality sector is always telling us that they are really struggling, so you’re balancing the health of a sector of the economy with cost of living on individuals with the ongoing costs of alcohol,” she said.
“I would like to think that this is a temporary measure – we would like to think the cost-of-living issues will diminish in the next couple of years, and that we will go back to previous practices of increasing alcohol duties more in line with inflation, but it is a very difficult balancing act.”
There was some potential good news for the hospitality sector, with treasurer Richard Bell confirming that officials were continuing to consider the introduction of so-called “tap relief”, which offers lower duty rates for draught alcoholic drinks and has recently been introduced in the UK.
Mr Bell said that work to explore tap relief was on going and that the policy could be ready to be introduced in 2026, if ministers decided it could be accommodated within a future Budget.
The 2025-28 Budget is due to be debated by States Members next month.
