Jobs and investment threat
Whisky distillers want Budget tax cut to offset US tariff hike
Karen Betts: ‘we need a lifeline’ (pic: Terry Murden)
Scotch whisky distillers want the UK government to cut spirits duty in the next Budget to ease the burden caused by a hike in US tariffs.
Pressure is piling on President Donald Trump to reverse the 25% tariff ons single malts which come into effect from today amid fears that investment will fall and jobs will be lost.
In the meantime, the Scotch Whisky Association (SWA) is calling for the Scottish and UK governments to work together to ensure distillers can weather the storm.
Karen Betts, SWA chief executive, said: “We want them to consider a range of support to the industry, including reducing the UK tax burden on Scotch Whisky in the Autumn Budget. This will provide an important lifeline while efforts continue to remove the tariffs.
“Despite multiple pressures on the UK government, including Brexit, this issue must not fade from the minds of ministers. Scotch Whisky has long been a standout export success. This is now at risk if government strategy does not urgently use all the powers at its disposal to remove these damaging tariffs.”
The SWA says single malts are being targeted and the tariff is particularly damaging for smaller producers.
This move undermines decades of hard work– Karen Betts
“Scotch Whisky has been imported tariff-free to the United States for the last 25 years,” said Mrs Betts. “This move undermines decades of hard work and investment which has seen Scotch Whisky sales boom in the US. It will impact both our industry and its supply chain.
“We estimate that the 25% tariff on single malt Scotch whisky will see exports to the US drop by as much as 20% in the next 12 months, as Scotch whisky will become less competitive in the US market.
“In time, consumer choice will diminish and Scotch whisky companies will start to lose market share. In Scotland and throughout our UK supply chain, we expect to see a dropping-off in investment and productivity. Ultimately, jobs could be at risk.”
She added: “We expect the damage to our industry to mirror the damage caused to exports of American whiskies to Europe since the EU imposed a 25% tariff in July 2018.
“That tariff has done nothing other than damage an industry very similar to, and closely linked with, our own.
“Alongside American whiskey companies, we have called on the UK, US and EU governments for many months now to find a negotiated solution to the trade disputes that have given rise to these tit-for-tat tariffs, and to ensure that duty-free trade can resume between the UK and the US to the benefit of whisky producers, their employees, the communities we work in, and consumers everywhere.
More than bottles second were exported to the US last year, worth $1.5 billion.
UK Government minister for Scotland Colin Clark said: “We need to ensure this continues and we are in close contact with the Scotch Whisky Association to make sure they know how seriously we take this issue
“We have been clear that resorting to tariffs is not in the interests of the UK, EU or US and I am deeply disappointed by their imminent introduction. These tariffs will not only have a significant impact on the export of aircraft and whisky but on many great Scottish industries such as textiles, including cashmere, and biscuits.
“The UK Government has raised the issue at the highest levels with both the EU and the US, including with President Trump and will continue to do so until these tariffs are dropped.
“We will continue to promote Scotch whisky and other produce across the globe and have also provided significant support for the industry in the last two budgets through the freeze on spirit duty.”