Gin and whisky tax break would boost UK economy

Cutting duty on spirits and wine in the UK by just 2% would lead to an extra £1.5 billion for public finances, a new report has discovered.

WSTA CEO Miles Beale (left) and SWA CEO David Frost (right) are behind the fight to reduce alcohol duty by 2% in the UK

The UK pays the fourth-highest level of duty on spirits in the EU, with 78% of the price of a bottle of whisky consisting of tax.

But if the rate of duty was lowered by just 2%, the subsequent increased investment across the industry, greater tax income and increase in jobs would boost public finances significantly.

Research conducted by EY for the Scotch Whisky Association (SWA) and Wine and Spirits Trade Association (WSTA) found the industry’s direct contribution to UK GDP would also increase by £0.9bn should a reduction be introduced.

The findings have been released as part of a joint campaign by the two UK drinks associations called Drop the Duty. Both the SWA and the WSTA are lobbying Chancellor George Osborne to introduce a “modest” 2% cut in duty across all alcohol products in the next Budget, due to be delivered in March 2015.

David Frost, chief executive of the Scotch Whisky Association, said: “If you buy a bottle of Scotch whisky to celebrate Christmas and New Year, nearly 80% of the average price you pay goes straight to the Government. This is unfair on both consumers and the Scotch whisky industry. We are calling for George Osborne to do the right thing and cut excise duty by 2% in next year’s Budget.

“New evidence shows that lowering these draconian levels of excise duty would actually boost public finances and the economy, as well as benefit consumers.”

Currently, tax accounts for 78% of a bottle whisky, 79% on gin, 76% on vodka and 56% on wine.

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, added: “Over half the cost of an average priced bottle of wine and over three quarters of an average priced bottle of spirits now goes straight to the Taxman. This is not only hurting hard-pressed consumers, but jobs and growth too. The Chancellor has one more chance to be fair and cut the duty on wine and spirits before the election, and it’s crucial that he takes it.”

According to the SWA, in the year to July 2014 spirit sales fell by 1% in the off-trade, and by 2% in the on-trade.