H.M. TREASURY Notes on Clauses

CLAUSE 1: RATE OF DUTY ON SPARKLING CIDER AND PERRY

INTRODUCTION

1. This clause increases the rate of excise duty charged on sparkling cider and perry with effect from 6pm 9 March 1999.

DETAILS OF THE CLAUSE

2. Subsection (1) substitutes a new rate of duty for sparkling cider and perry in section 62(1A)(a) of the Alcoholic Liquor Duties Act 1979. The previous rate of £45.05 per hectolitre shall be replaced by £161.20 per hectolitre.

3. Subsection (2) makes the change effective from 6pm 9 March 1999.

BACKGROUND

4. Infraction proceedings against the UK were threatened by the European Commission in 1995, alleging that sparkling cider (mainly domestically produced) had a duty advantage over competing lower-strength sparkling wine (mainly imported). The products are often similar in taste and alcoholic strength and some were being offered for sale with very similar presentations. The duty differential was anomalous.

5. The UK negotiated an agreement with the Commission to align the duty rates on these two products. This change is the final step in the process of aligning the rates of duty for sparkling cider and lower-strength sparkling wine.

6. The process of alignment has taken place over a number of years - and in full consultation with the industry - to enable producers to adapt to the change. This will impact on a small number of cider producers: sparkling cider currently represents less than 0.5% of cider production.

7. The change in the rate of duty is effective from 6 pm on 9 March 1999.

8. The revenue effect of this change is negligible given the small quantity of cider affected.