Gin makers have joined forces to call for the Chancellor to freeze spirit duty and head off a painful tax bill set to stifle the British gin boom.
21 top distillers have teamed up with the Wine and Spirit Trade Association and written to Philip Hammond and the Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, raising serious concerns over a planned increase to spirits duty at the Budget in November.
Gin duties collected in the UK will go up around £25million on last year if Philip Hammond puts the boot into booze at the Budget and raises duty again for the second time this year.
In March the Chancellor increased spirit duty by inflation at 3.9% which added 30p to an average priced bottle of spirits. Yet despite the rise, the Chancellor now plans another increase to spirit duty again, just 8 months after the last one, by 3.4% adding another 26p to bottle.
The sneaky inflationary increases are part of a government policy planned to last for the duration of this Parliament, which means the Government is set to rake in £2billion from British gin over the next five years.
Entrepreneurial spirit makers are warning that the tax burden will stifle the growth of innovative, creative start-ups who have helped drive the gin renaissance and allowed British gin to break records both home and abroad.
The gin distillers’ plea for a freeze comes a week after frustrated English wine producers signed a joint letter to Hammond calling for him to scrap planned wine duty hikes and support the home grown wine industry.
Matthew Gammell, Co-founder of Pickering’s Gin in Edinburgh, said:
“In 2016 Summerhall Distillery paid 31% of its annual turnover in duty alone. Our bottles retail at £29.95 which means that 45% of the money spent on a bottle of Pickering’s gin goes on duty and VAT.
These hugely unfair tax burdens mean that cash flow is severely restricted when a business like ours is trying to grow. The current proposed increase in duty of 3.4% would mean an increase in duty of £24,500 which for us is the equivalent of another employee. We would like to continue to grow and help boost the British economy but it is becoming increasingly tough to remain competitive in the marketplace.”
The small distillery has big ambitions and have launched projects including gin bauble Christmas decorations and a range of gins made for Cunard, but say they need Government support to fulfil their potential.
Alex Wolpert, founder of the East London Liquor Company, said:
“We absolutely support a freeze to spirit duty, particularly as this is an opportunistic second increase this year at a time the government knows only too well that alcohol sales increase considerably over the festive period; duty already accounts for approximately 40% of our bottle price. With the current economic landscape, including the cost of living increasing and wages at an all-time low, the consumer ends up being the one to foot the chancellor’s duty increase, perpetuating the problem of the public’s expendable income being further reduced.”
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said:
“The gin renaissance has benefited from the craft cocktail craze which has been sweeping the country in the last couple of years. We have seen a rapid growth in the number of distilleries in the UK and a new wave of UK and spirit makers are turning their hand to gin production in a bid to keep up with the thirst for new gin experiences.
However government is stifling the gin boom by adding to its already high tax bill this year. British gin is a global phenomenon which is why we are asking the Chancellor why he is penalising what Britain does best? By freezing spirit duty he would be allowing industry to invest, create jobs and grow.”
2016 was dubbed the year of gin by the WSTA after sales in the UK broke the £1billion barrier.
British gin is now worth £1.2billion in sales to shops, pubs, bars and restaurants with over 45 million bottles sold last year, an increase of 36% since 2012.
In the last five years, the number of distilleries in the UK has more than doubled to 273, with 40 opening in 2016 alone. The most notable increase was in England with 84 opening in the last five years.
The UK is the biggest gin exporter in the world. British gin exports are now worth more to the UK than beef with exports, valued at £475million last year.
The WSTA has calculated that if the government goes ahead with its punitive plans for duty hikes, lasting the duration of this Parliament, then tax on a bottle of gin will go up by over a pound from £8.05 in 2017 to a predicted £9.13 by 2021.*
Following the cut in spirits duty in the 2015 budget, spirits duty income increased on the previous year by £124m (+4.1%) from April 2015 to March 2016 inclusive.