In its Budget submission to the Treasury, the Scotch Whisky Association (SWA) sets out the unfairness of the current level of tax on Scotch Whisky – 77% on an average priced bottle – and calls for a 2% cut in excise duty.
The SWA is calling on the Chancellor to ‘Stand up for Scotch’ in the Budget on March 8 to support a strategically important industry, benefit consumers and boost public finances.
As the largest net contributor to the UK’s balance of trade, Scotch Whisky is vital to the UK economy and a truly global drink. In its submission, the SWA says that during a time of change created by Brexit, the industry needs a supportive domestic tax environment. A 2% cut in excise would be a move in the right direction, as would steps towards excise duty fairness in future Budgets.
Such support would also give confidence to the unprecedented level of new entrants to the industry. Since 2013, 14 Scotch Whisky distilleries have opened and a further eight are set to start production this year. The UK is the fourth largest market for Scotch and is particularly important for newer companies. While a competitive domestic business environment is vital to new starts and SMEs, it also benefits existing distillers looking to expand to meet growing demand.
A fair tax for whisky is also likely to boost spirits revenue to the Treasury. Following the 2% cut in spirits duty in March 2015, spirits revenue in 2015/16 increased by £123 million to £3.15 billion. Spirits revenue is now £155m a year higher than when the spirits duty escalator was scrapped in 2014.
Julie Hesketh-Laird, acting chief executive of the Scotch Whisky Association, said:
“A 77% tax on a bottle of Scotch Whisky is unfair for a number of reasons, so we are calling for a 2% cut in excise in next month’s Budget. The onerous level of tax fails to recognise the strategic importance of Scotch Whisky to the UK economy and its export performance. And it punishes responsible consumers of Scotch Whisky who are paying over the odds in tax compared to people who choose other drinks. A cut in excise for Scotch is also likely to be good for the public purse. Positive changes to tax in recent years have seen spirits revenue grow.
“We hope that the Chancellor will consider the compelling evidence of the benefit of a cut in excise duty on spirits and give the Scotch Whisky industry and consumers some cheer in the Budget on 8 March.”