Budget: 4% rise in spirits duty
Whisky duty hike ‘a major blow’ to sector
The Scotch Whisky Association (SWA) was dismayed by the Chancellor’s decision to impose a near-4% increase in excise duty on spirits – equivalent to 36p a bottle.
The hike emerged from a reading of the small print in the Budget papers.
When the Chancellor announced that there would be “No change to previously planned upratings of duties on alcohol”, commentators interpreted it as a freeze. In fact, excise on spirits, including Scotch Whisky, will rise by 3.9%. Excise and Vat on an average priced bottle of Scotch in the UK now stands at 79%, so that £4 in every £5 a consumer spends on whisky goes straight to the Treasury.
It is one of the highest levels of tax in Europe, and 21% higher than in 2010. The excise duty burden on a 70cl bottle of Scotch is £8.05 and the total tax is £10.20.
The SWA, which had called for a 2% cut in duty, said it is time for a fundamental review of the alcohol duty system, describing the move as damaging to a major industry and at odds with the Prime Minister’s words during a speech in Glasgow last week, where she described Scotch Whisky as ‘a truly great Scottish and British industry’.
The Scotch Whisky industry supports more than 40,000 jobs across the UK, many in economically fragile areas, and adds value of around £5 billion annually to the economy.
The SWA said the increase goes against recent experience that a duty cut would boost the public finances. Following more supportive duty moves, revenue from spirits duty increased by 4.2%, or £132 million, to £3.25bn in 2016. The SWA also warned that a duty increase could undermine the recovery of the UK market for Scotch.
Julie Hesketh-Laird, Scotch Whisky Association acting chief executive, said: “A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress. Distillers will find it hard to understand why the Chancellor is penalising a strategically important British industry with this tax increase.
“At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit.
“Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law. The system is in need of a fundamental review and reform to make it fair and competitive.”