UK Chancellor to go ahead with tax stamp plan

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The trade is waiting to learn whether travel-retail outlets will be exempted from the government?s latest measure to tackle liquor excise fraud

UK Chancellor of the Exchequer Gordon Brown has announced the government will press ahead with its plan to introduce tax stamps on bottles of liquor above 22%abv. The move, designed to reduce spirits fraud which UK Customs values at £600m ($1.1bn) per year, has been opposed by the UK travel-retail industry, which has argued that the plan would place disproportionate compliance costs on all companies involved in the manufacture, supply and sale of liquor products.

UK Travel Retail Forum secretary general Barry Goddard told TRW that the move was disappointing in light of its and the spirits industry's discussions, in which a variety of alternatives to the stamping scheme were discussed. "It certainly won't encourage the spirits industry to cooperate with Customs," he admitted. "And details of how or when it will be implemented are still unclear. But our priority now is to ensure that travel-retail outlets at airports and with Registered Mobile Operators are exempted."

The government may already have granted an exemption, but Goddard said no details had been communicated. A Customs notice tomorrow may clarify the matter, but in any case the trade will know its fate by the time the Finance Bill is published, usually two weeks after the budget announcement.

A prime concern is that the extra labelling costs may force some smaller suppliers to drop out of travel-retail markets to avoid having two production runs. The stamping machines cost at least £85,000 and cannot be bought in the UK.

In the government's annual budget, Brown told Parliament: "In making my decision that stamps are necessary to tackle fraud, I will help the trade financially with cash flow costs and defer payment for tax stamps and I will assist firms with capital investment."