Spirits boost UK govt coffers by £101m in 2016

UK spirits sales raked in an extra £101 million (US$125m) in tax for the Treasury in the 12 months to October, new Scotch Whisky Association (SWA) data reveals.

In total, the spirits industry contributed £3.212 billion (about US$4bn) in tax to the government over the period, up from £3.111bn (US$3.8bn) the previous year.

The total paid in tax has increased since the Government ended its policy of increasing excise by inflation plus 2% – known as the ‘alcohol duty escalator’ – in 2014.

The Chancellor of the Exchequer then cut spirits duty by 2% in 2015, boosting spirits revenues by £123m (US$152m).

It is calculated by the SWA that receipts from spirits duty are now £155m per year higher than when the escalator was in place.

UK tax on spirits is currently set at 77% a bottle* – a figure the SWA says is unfair.

“Easing the duty regime on Scotch whisky has helped customers, businesses and taxpayers,” said Julie Hesketh-Laird, SWA acting chief executive. “The boost to public funds is the result of a successful policy.”

“Scotch is one of the UK’s most important industries, supporting around 40,000 jobs and contributing £5 billion to the economy each year. Government support for industry helps to give small businesses, as well as larger producers, confidence in the future.”

“The current tax rates remain unfair and we believe that there is an opportunity for the Chancellor to bring cheer to consumers and boost the Treasury’s coffers next year.

“This Christmas and New Year we hope that the Chancellor raises a glass to the Scotch whisky industry.”

*The SWA calculates the 77% tax (VAT and excise duty) figure based on an average selling price of £12.80 for a 70cl Scotch bottle in the UK off-trade. Of that, excise forms £7.75 and VAT forms £2.13 (Vat is charged twice on Scotch – on excise and on the final selling price). Therefore total tax on a bottle is £9.88.