What a difference a tax makes

Taxes on wines in Europe impact significantly on what consumers pay for their pleasures. For publication in the week of 18 April 2016.

Last week’s column on the evolution of India’s wine industry over the past three decades noted that a complicated range of taxes made wine very expensive. Indeed, taxes impact heavily on the pocket book of any visitor to that country: We typically noted six different taxes on top of the bill at restaurants, adding about 40 per cent to the advertised cost on the menu.

This leads us to consider the issue of taxes on wine among European wine-making nations compared with the high cost of wine in the United Kingdom, and the possible influence these high taxes have on decisions to take holidays there.

The average retail price of a bottle of wine in the UK as of mid April was £5.50 (USD 7.78), and 54.5 per cent of that price goes to the government in VAT and excise duty. A wine sold for £10 (USD 14.16) attracts taxes of 37.5 per cent of the total cost. Excise duty on still wine in the UK is £2.04 (USD 2.89) a bottle and £3.20 (USD 4.53) for sparkling wine. In France excise duty or tax on a standard bottle of wine amounts to about US 4 cents.

Among the main wine-producing nations in Europe, taxes are negligible compared with the UK. In Italy, Germany, Spain, Austria, Portugal, Switzerland, Romania, Hungary, Czechoslovakia, Croatia and Cyprus the excise on still wine is nil. Austria, Hungary, German and Romania apply a small tax on sparkling wine.

One must ask why such punishing taxes apply in the UK? Is drinking wine seen as some sort of moral failing that must be punished or curtailed?

Richard Ross, a member of the Circle of Wine Writers, has created a useful app called the UK Wine Tax Calculator. It is available on iTunes, and uses data supplied by Her Majesty’s Revenue and Customs.

Low or minimal taxes help explain why it’s possible to drink quality wine for low prices in France and much of Europe. This month we tasted a range of low-cost wines in French supermarkets and local shops and were surprised at the quality.

For example, the 2014 Belle France Cinsault rose cost under 3 Euro at a local shop in Eu in Normandy, which means it would cost about 2 Euro at a supermarket. This rose comes from the Languedoc in southern France. Cinsault is one of the world’s under-appreciated grapes, with an ephemeral and distinct quality that makes lovely rose.

Another quality wine for a low price was a 2013 Beaujolais Villages by Francois Prothereau and Sons. It had lashings of ripe red fruit with aromas of cherries and spice, and sufficient acidity to sustain the wine with a range of foods. Another bargain, purchased for under 6 Euro in a local shop. Wine prices might influence your choice when considering where to take your next holiday.

The weight of a bottle has always troubled environmentalists. In Normandy we encountered an intriguing way of presenting quality wine, in test-tube shaped bottles a third of the size of a standard bottle. It’s called “vin en tube”. This is the world of French wine re-inventing itself — the vinous equivalent of Nespresso coffee. Convenience is all.

Anthropologists would enjoy playing with this concept: Has wine moved from being a religion in France to more of a cultural product? Are we seeing the reverse in parts of Asia, such as China where wine has moved from being an aspirational lifestyle choice to a new way of embracing the world? Is test-tube wine a way of capturing the Millennials market (those born since about 1980) in France and elsewhere in Europe? A way of enticing people who have not been exposed to wine the way their parents were?

In terms of per capita wine consumption, Italy leads the world ahead of France, Switzerland, Portugal and Austria. These are all countries where quality wine is inexpensive (apart from Switzerland, where everything seems to be expensive).

Meanwhile, Château la Tulipe in Bordeaux, owned by Dutch author and former rock artist Ilja Gort, has advertised for 20 British people to tend its vines this summer. According to a press release from Angélique van Schalkwijk for la Tulipe, these people will work from “the crack of dawn” until 6pm apart from a break for “a slow and lengthy lunch” for five days. Accommodation is basic: Pickers are invited to pitch their tents in the chateau’s grounds. And the benefits? The press release promises access to “the finest wines” from Gort’s cellar but no salary.

Footnote: In this year’s competition to select the “50 Great Portuguese Wines” one region was particularly successful: Nine of the winning wines were produced in the Alentejo region, the subject of several earlier columns. The jury consisted of three Master Sommeliers from the USA: Peter Granoff (named sommelier of the year by the James Beard Foundation) along with Dennis Kelly, chief sommelier of Thomas Keller’s California restaurant The French Laundry, and Madeline Triffon, one of the first two women Master Sommeliers. They tasted almost 400 wines.

Two whites made the list: the 2013 Terrenus from Rui Reguinga and the 2014 Monte da Ravasqueira Branco. Red winners included the 2009 Roquevale Grande Reserva, 2010 Azamor Selected Vines, the 2011 Adega de Borba Reserva, the 2011 Comendador from Adega Mayor, the 2012 Cortes de Cima, the 2014 Art Terra from Herdade São Miguel and the 2014 Pera Doce Premium from Herdade da Candeeira. Well doneAlentejo.

Words: 868

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