24.11.16 Sherry Wants Same Tax Treatment as Other Spanish Wines

The Spanish government is desperately seeking to plug a hole in its finances of some 5.5 billion, and is seriously considering increased mortgage rates and a rise in alcohol tax among many other options. A tax rise would have severely negative effects on Jerez and Fedejerez paints a very gloomy picture as Sherry is already taxed at a higher rate than any other Spanish wine, and along with Jerez brandy, which accounts for 92% of Spanish brandy production, would be hit hard. What is more raising alcohol tax would hurt the hotel, bar and restaurant trade, the wine and brandy trade, and of course employment.

Fedejerez has joined forces with the Federación Española de Bebidas Espirituosas (FEBE) - which covers all alcoholic drinks and the various agrarian organisations, distributors, horeca etc. – to create a powerful lobby which will hopefully make the government think again. The presidents of Brandy de Jerez and FEBE, Evaristo Babé and Bosco Torremocha pointed out that the last time tax was increased on alcohol, in 2013, it proved counterproductive as government receipts decreased due to a loss of sales, particularly in horeca.

Babé totally rejected the idea of increased tax on brandy while Fedejerez is claiming that Sherry should be treated in the same way as Montilla-Moriles which is not subject to the higher tax rate despite containing much the same amount of alcohol – it is just that Sherry is fortified and Montilla is not. “These wines are table wines just like the rest. Over taxation produces reduced tax receipts and if the finance minister, Cristóbal Montoro, wants to increase income he should reduce public expenditure, and remember the economic importance of alcoholic drinks”.

Not increasing taxes could lead to a gentle rise in government receipts, which are currently about 20 billion euros. According to a study by Analistas Financieros Internacionales (AFI) increasing the tax would reduce those receipts by 46 million and leave 52,734 people out of work in the first year. Everyone is hoping the government sees sense.

The current Spanish rate of tax on Sherry is 55.53 euros per hectolitre, or 0.416 euros per bottle as opposed to table wines which bear a tax of 33.32 euros per hectolitre, or 0.25 euros per bottle. Both are, of course, subject to IVA (VAT). In the UK, excise duty on table wine is £2.08 per bottle and Sherry is £2.78 per bottle, again subject to VAT.