Philip Webster, Political Editor
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Alistair Darling will increase duties on wines and spirits next week as he presents a Budget to stave off recession.
Against a backdrop of worsening conditions in the US economy and renewed anxiety in the City, the Chancellor of the Exchequer told The Times yesterday that he would “support the economy in what are undoubtedly difficult times”.
Economists expect Mr Darling to cut his growth forecast for 2008 by a quarter of 1 per cent on Wednesday. They also predict sharply reduced tax receipts in the year ahead and increased borrowing.
But the Chancellor’s repeated insistence that he would “support the economy” suggested that any tax increases announced on Wednesday, particularly on high-emission cars and other green targets, are likely to be delayed for at least a year.
America’s central bank said that it would make available as much as $200 billion in emergency funding for the banking industry in a further sign that the US is facing the possibility of a serious downturn.
Julian Jessop, from the consultants Capital Economics, said that rising US unemployment was likely to be the “tip of the iceberg”. He added: “One thing history teaches us is that when an economy stalls and drops into recession things get bad very quickly.”
Mr Darling told The Times that his main objectives were to ensure stability and to prepare the country for the future. He said tackling climate change was one of the “huge challenges” ahead.
He is expected to avoid a fiscal tightening by allowing borrowing to rise, but will need more income from taxes over the longer term to keep within his financial rules. Delaying taxes would be designed to reassure the markets.
The Chancellor insisted that the British economy was better placed than most to handle the uncertain times. He said that there had been two recessions under the Conservative Government, but added: “I am optimistic we will get through these difficulties because of the strength of our position.
"Everybody is affected by what is happening in America. But I am confident we will get through this. I have no doubt about that. But it does mean you have to stick to you guns. You have to ensure you do not do anything that takes risks.”
Mr Darling stood by his changes to capital gains tax and the imposition of a charge on non-domiciles resident in this country, but hinted that they could have been handled better. He suggested that future changes in banking supervision rules would be “proportionate” and promised to help the City by trying to break down trade barriers. “I am going to China in April to talk about encouraging new exchanges between China and companies in the financial services industry,” he said.
His remarks ensure a Budget clash over alcohol duties and the ways of tackling binge drinking.
The Conservatives unveiled plans for big tax rises on alcopops and strong beers while cutting duty on lower-strength drinks to boost sales
George Osborne, the Shadow Chancellor, said that the package did not affect the vast majority of responsible drinkers. Mr Darling dismissed the plan as a gimmick.
Sales of alcopops had plummeted so it was difficult to see how the Conservatives could raise extra money from them, he said.
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More tax, what a surprise! I suppose buying voters costs a lot of money. Please read Vernon Coleman's books if you want some real insight and an education as to what is really going on.
Babis Gakis, Braintree, Essex
I support much lower (zero?) tax on low alcohol beers and higher tax on higher alcohol beers - plus meetings should be with the brewery companies to seek to get low alcohol drinks available as draught.
About 20 years ago, I regularly found draught Tennants LA (just over 1% alcohol) in pubs. Now it seems much harder to find low alcohol drinks available as draught. This is odd, considering there should be good demand for a low/very low alcohol beer by socially responsible drivers who would like a pint. Pricing is surely a factor that could help change this.
D Nancarrow, Sutton, Surrey
I would agree with the consensus that to live here you need a drink. Nu Labour has wrecked public finance control. Taxing booze is soft option. Try capping some Nu Labour councils and relieving pensioners / low income households of the single persons dwelling disadvantages of the archaic systems of paying for local authority final salary pensions sorry council tax. Try capping Welsh assembly members pay rises, reducing staffing levels in public quangos is good for starters. Bring in Euro get rid of BOE, get rid of Nu labour and Tories, let the Euros/Germans run our finances. At least they can do maths and get the figures to add up etc.
But please leave the one ruin I can afford to make this country palatable.
Francis, Cardiff, UK
Isn't it time for the Government to cease the practice of giving Alcoholics who receive Benefits, an extra £30 a week to buy their supplies of alcohol. Encouraging binge drinking of this nature is an insult to the taxpayers.
Irene, Confolens, France
But Mr Darling we need drink to forget about these dark times. Don't tax it please.
Warren, Southport, Merseyside
Public spending wouldn't be so high if the government hadn't created all those non-jobs with inflated salaries. £167 billion spent on quangos, at least half all jobs in these could be cut, that would make the public spending deficit disappear. Oh! I forgot these are Labour supporters sacking them just wouldn't be politically acceptable.
Stephen, St. Ives, England
Fix society to reduce binge drinking. I'm already planning how to do two booze cruises a year to keep me in cheap wine - and I live in Scotland. (Or maybe its an anti Scottish tax since we're beyond cheap channel crossings?)
Adding to the tax will just further alienate the public from this cowardly, money and target obsessed government. The sooner we can get rid of them the better.....
James, Glasgow,
more tax oh boy
glad i left
saud, riyadh,
Increase Tax on drink across the board.
Increase tax on New Oil Exploration Consortium's to 14% on all new Oil Reserves.
Place a 10% Tax on renewables and donate that money to a Climate Change Fund for Humanitarian Missions Globally.
All Public sector buildings to be solar energy compliant within 4 years.
Introduce a new Government fund for Climate Change Humanitarian and development relief Aid for England , Wales ,Scotland and Ireland.
Member's of Parliament Pay to be treated as Entrepreneurs.
Bring in an Auditor General for the Derivatives Trading Sector so that is better regulated.
Serve the people rather than take them for idiots.
Budget for the creation of English Parliament.
Review the Council Tax property valuations as they are outdated and a new modern appropriate valuation system needed.
Help he entrepreneurs that have vision and ideas to stimulate economy.
Do not stigmatise those that seek a better standard of life for their children and themselves.
The Ambassador, LONDON, England
A Govenment cannot bind its successors... but then this government knows little about Government,
Brian Gilbert, HAMPTON, Middx
You can increase tax as much as you like on alcohol,it won't stop people drinking.However,it will push up the CPI and hence,interest rates.Maybe people are so depressed with this government,they'll drink even more.
stephen hulton, eure, france
Poor Britain. Alastair Darling's plan to raise taxes on wine is the opposite of what his counterpart in Hong Kong did at the end of February. In the HK budget ALL duties wine, beer and alcohol except spirits were scrapped. Why? Because while the move cost of government HK$560 million a year in lost revenue, it was thought that by making HK a wine
hub, the total business volume in trading, storage and auction of table wine could increase by up to HK$4 billion. My round I think!!!
Keith Wallis, Hong Kong,
Taxation is not the answer. It will help the treasury, but the root causes will remain. The answer is to educate both parents and juveniles to the danger of binge drinking and use harsher punishments including jail time , loss of earnings and payment for the use of A&E facilities to deter binge drinking.
Hamad Lone, London, England
Young people who drink are not necessarily stupid. Most are canny enough to know that if larger goes up a few pence they can always buy spirits - bettert value - gets you there quicker. What is the government to do - increase duty by 1000 percent. I think not. They would loose to much from lower demand.
Better education and more control would possibly help.
At the end of the day it is the parent/s who are responsible for their children.
PG
peter, ammanford, uk
"Can hardly wait for Wednesday for Alistair to make his mark !"
He is at present saddled with Brown's planned doubling of income tax paid by low income people (with the 10p tax rate being replaced by the 20p standard rate). Any way he could help that prime Labour demographic?
Robert Williams, Halifax, England
Typical of the limted and flawed thinking of this government. Raising duty on alcohol will do nothing to curbe binge drinking. Everybody knows that, even the Chancellor. Other European countries with much less duty on alcohol do not have the same binge drinking problem as the UK
Gordon Brown followed the same flawed reasoning when he slapped a surcharge on flights in an attempt to curb flight travel.
Or is this same flawed reasoning being used simply to provide a convenient excuse to raise taxes on the already most taxed nation in Europe ? Or am I being cynical ?
A Buckley, Bolton, UK
I'm sure that drinks will go up and I'm also sure that it will resolve nothing. A few more pennies added to the purse of the most wasteful Government in history and one more pleasure taken away from poor people who are already suffering from a pitiful pension and taxed till they bleed.
Roger, Surrey,
With pubs vanishing in the last few years at the rate of forty to fifty a month to be converted into residential accomodation as pub companies sought to swell their profits I wonder what they can do now in the face of falling property values especially as many apartments are worth fifty per cent of original value.. The rising price of food and the increasing impact of mortgages will not stop the 'boozers', but will impact substantially on those whose little pleasures are a quiet pint or the occasional bottle of wine. Darling is disconnected from his constituency.
Dunmatime, Bradford, UK
Ref. the idea of differentially taxing alcopops. The post on eureferendum.com is a must read. It details the complex ways in which a chancellorâs hands are tied - in a nutshell, itâs a non-starter. Generalising this issue also explains the triviality of todayâs politics. Itâs because the remaining powers at Westminster are trivial.
Alan, bristol,
So now the "alc-class-war" is on... Laobur introduces higher taxes on "middle class" wine (admittedly also on spritis, but it remains to be seen whether this will hit the "single-malt" crowd more than the wodka-orange-crew), only days after the Tories suggested higher taxes on alcopops (presumably a prole-drink)
Adrian, London, UK
Darling is boxed in because the previous Chancellor, one Gordon Brown, raised public spending and borrowing to irresponsible levels when the economy was doing well. Brown should have been running a fiscal surplus and paying off the national debt, instead of which he ran a public sector deficit. There is no money left in the public spending kitty just when we need it, because Brown blew all the money by his lack of prudence and profligacy with our money!
R Marriott, Kidderminster, England
I laugh how they blame it all on the US. Anyone would think they are not massively in the red through their own overspending.
adrian, manchester,
If poor old Darling - (McSporran's fall guy) wants to earn his spurs, he should stand up and say "there will be no changes to anything whatsoever this year" and sit down. He will (a) be sensible and (b) famous forever.
Victor M., Chelmsford, Essex.,
Can hardly wait for Wednesday for Alistair to make his mark !
Jo Sullivan, Liverpool, Merseyside
Ending casino gambling might make a very significant difference for the economy by raising savings rates and spending on consumer goods/
MARK KLEIN, M.D., OAKLAND, CALIFORNIA
Alcohol is very expensive in Scandinavian countries but they have a drink problem. No, it's a cultural matter when people deliberately drink to be drunk. Many of them see no reason to drink unless it results in a full-on drunken stupor.
Part of that might have been because brewers aimed some drinks directly at children which encouraged them to start drinking before they could be responsible enough to control it.
Fogies like me drink socially (every day) with no desire to be drunk. I don't mind being tipsy but not paraletic and I never become agressive. I know a good many more people who are like me.
Like the drug culture, I mostly blame the heavily promoted Ibiza/18-30 lifestyle and other messages given out by celebs and trendy TV programmes.
Watch any Jonathan Ross show and there will be a humorous hint, at some point, about being drugged up or drunk. He's saying with a wink that it's OK - and he's a model of success.
J Briggs, Huddersfield, Yorkshire