Scotch Whisky Association :: Scotch Whisky industry meets with Treasury on 80% duty burden :: 11th February, 2015
11th February: The Scotch Whisky industry this week met with the Treasury in advance of the UK Budget on 18 March to put its case for a 2% cut in spirits duty.
Representatives from the Scotch Whisky Association (SWA) yesterday (10 February) discussed the pressures on the industry caused by the nearly 80% tax burden on an average bottle of Scotch with Exchequer Secretary to the Treasury Priti Patel MP.
While the SWA welcomed the Chancellor’s decision to scrap the alcohol duty escalator and freeze excise in last year’s Budget it said more has to be done to support the industry.
The Scotch Whisky industry contributes almost £5 billion to the UK economy and supports more than 40,000 jobs but its future growth is being stifled by the current excise regime. A cut in duty would give a further boost to the industry and its supply chain. Supporting Scotch in its home market would allow the industry to add to the £1.8bn it already spends annually on supplies, such as bottles and packaging.
The SWA said taxation is putting pressure on the industry, in the UK and overseas, and consumers:
Excise on Scotch is 44% - or £2.42 a bottle – higher than when the escalator was introduced in 2008.
Duty on Scotch has only been cut three times in the last century.
The UK is the third largest Scotch Whisky market but challenges are being exacerbated by the high level of tax. The number of bottles of Scotch released for sale in the UK in the first half of 2014 was 35.4 million, down 7.30% from 38.2m in the first half 2013.
Scotch exports were down 6% in volume and 11% in value in the first half of last year. The tax burden in the UK encourages discrimination against Scotch in overseas markets.
Two out of three people in the UK are unaware they pay almost 80% of tax on a bottle of Scotch. When they are told the level of tax, 84% describe it as unfair.
David Frost, chief executive of the Scotch Whisky Association, said:
“We had a warm and constructive discussion with the Exchequer Secretary to the Treasury, Priti Patel MP. The Minister clearly understands Scotch Whisky’s economic importance and we welcome her interest in the industry.
“In the UK, Scotch Whisky is under sustained pressure from taxation. 80% of the price of an average bottle of Scotch Whisky is taxation and we hope the government will take on board our concerns about the negative impact of this onerous tax burden.
“In last year’s Budget, the Chancellor highlighted Scotch Whisky as a ‘huge British success story’. We hope this year too he will show his support for this world-class manufacturing industry, which adds £5bn to the UK economy and £4bn net to the UK trade performance every year.
“We hope the Government will back us by cutting duty by 2% for Scotch Whisky this year. This would be fair to consumers, send a powerful signal to export markets, support public finances, and most of all promote investment and jobs.”
The SWA also outlined its Budget case to the Chief Secretary to the Treasury, Rt Hon Danny Alexander MP, at a meeting in late January.