Cutting tax on whisky could give Exchequer an extra £750m


Cutting tax on Scotch Whisky and other spirits in the Budget could give Chancellor Rishi Sunak an extra £750 million to spend over the next three years, according to an analysis of alcohol taxation.

The figures, based on modelling conducted by the Centre for Economic and Business Research (Cebr), show that HM Treasury can generate an additional £748m in duty and VAT over a three year period by cutting excise duty on spirits by 5%.

A reduction of the significant tax burden on Scotch Whisky, which currently sees £3 in every £4 spent on the average-priced bottle of Scotch Whisky go directly to HM Treasury in taxes, would actually drive government revenues, boost the hospitality industry – which has been one of the worst impacted by Covid-19 – and lift the nation’s spirits after a challenging year for industry and consumers.

The new figures have been released as the Scotch Whisky Association presents its submission to the Chancellor ahead of the 3 March budget.

The industry has also stressed to the Chancellor the need to support the industry in the face of punitive tariffs imposed by the United States on exports of Scotch Whisky.  These tariffs have cost the industry  £450m over the last fifteen months, and losses continue to rise. That Scotch Whisky is paying the price of a trade dispute between US and European aircraft manufacturers is creating real pressure on jobs and businesses and has compounded the losses the industry has also faced because of the global pandemic.

The impact of US tariffs on the industry has added to pressure on the Chancellor to go further than the freeze on duty he announced in the last UK budget.

Karen Betts, Chief Executive of the Scotch Whisky Association, said, ” The last year has been very challenging for the Scotch Whisky industry, with the combined impact of Covid-19 and US tariffs.  Scotch Whisky producers, large and small, are facing considerable losses and, as a result, we are urging the Chancellor to cut spirits duty in the Budget.

“A cut in duty will also help the hospitality sector, with pubs, bars and restaurants across the UK crying out for continued support.

“The industry is not going cap in hand to the Chancellor – but in order that we can be a partner in recovery, the Chancellor must use the tax system to help grow the economy. A cut in spirits duty will deliver additional revenue for the government as well as supporting our industry as we absorb millions of pounds of losses as a result of UK government subsidies to aerospace, which sparked the trade dispute that has seen 25% tariffs on exports of Scotch Whisky to the United States.

“With £450 million in losses to date and counting, jobs and businesses are now at risk, in Scotland and throughout our UK supply chain. The industry needs a package of support from the UK government while distillers continue to face crippling tariffs, and the Chancellor can start by cutting duty in the budget.”

Category: News
Tags: duty, Karen Betts, scotch whisky association, Whisky