Industry campaigns to reduce UK’s ‘draconian’ spirits tax

The Scotch Whisky Association (SWA) is to campaign for a 2% tax reduction in the UK after revealing duty and VAT account for 80% of the price of a bottle of whisky.

The trade body claims the UK’s excise duty system is “draconian”, and must be altered to support the UK spirits industry, which is currently in decline.

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

Despite successfully campaigning for the scrapping of the controversial alcohol duty escalator and a freeze on spirits duty earlier this year, the group claims more must be done to support the industry.

The SWA has partnered with the Wine and Spirits Trade Association (WSTA) to campaign for the tax break in the next Budget, due to be delivered in March 2015.

Miles Beale, CEO of the WSTA, said the UK spirits industry is being “undermined” by excessive rates of tax. “The UK wine and spirit industry directly employs 475,000 people,” he said. “The scrapping of the escalator was an important acknowledgment that excessive tax increases are harmful to such an important UK industry, which is why we will be campaigning for further progress towards fairer duty in the 2015 Budget.”

The UK charges the fourth highest rate of excise tax on alcohol in Europe, behind Sweden, Finland and Ireland.

The SWA claims the discarding of the tax escalator has not helped to recover falling sales of Scotch whisky in the UK yet. According to their figures, sales of Scotch fell 7.3% to 35.4 million bottles in the first half of 2014 compared to the previous year.

David Frost, CEO of the SWA, said: “The Scotch Whisky industry is of vital importance to the entire UK economy and, in particular, its export performance. We support around 40,000 jobs across the UK and export in the region of £4 billion each year.

“However, the draconian excise duty system in the UK means around 80% of the average price of a bottle of Scotch is made up of duty and VAT. This inhibits the demand for Scotch in its domestic market and sends the wrong message to overseas governments when they are setting their tax policies.”