Scotch tax cut could give Treasury £200m boost

10th November, 2017 by Owen Bellwood

New analysis predicts a tax cut for Scotch whisky could boost the Treasury’s income by £200 million (US$263m) over the next five years.

Chancellor Philip Hammond has come under increasing pressure to reduce taxation on Scotch whisky

The new modelling, carried out on behalf of the Scotch Whisky Association (SWA), shows a 3.9% cut in duty would generate an extra £42m (US$55m) in tax revenues over the next year.

The findings showed that even if the chancellor was to cut duty by just 2%, this drop could bring an extra £105m (US$138m) to the Treasury by the end of parliament 2022-2023.

In contrast, the analysis shows that sticking with inflation-linked duty increases every year will see revenues fall by £290m (US$381m) by 2022-23.

Karen Betts, chief executive of the SWA, said: “These figures show that cutting spirits duty in the Budget will be good for the Treasury, good for the UK economy and good for our world-famous Scotch whisky industry.”

This modelling mirrors the £124m (US$163m) boost the Treasury saw following a tax cut in 2015.

Meanwhile, HMRC figures show spirits revenue fell by more than 7% in the first quarter after the chancellor increased duty by 3.9% in April.

These findings follow a Westminster Hall debate last month, in which several MPs demanded fairer taxation on Scotch.

Kirstine Hair, Conservative MP for Angus, said: “I am fully aware of the importance of the whisky industry across Angus, Scotland and the UK.

She continued: “There is a perception that this is a Scotland-only issue, when virtually every one of the UK’s 650 constituencies benefit in some way, with a large proportion involved directly in supply.”

Following the duty increase in April, the level of tax on a bottle of Scotch whisky currently stands at 80%, meaning that of an average bottle sold at £12.77 (US$16.79), more than £10 (US$13) goes to the Treasury.

Last month, the SWA revealed that sales of Scotch whisky in the UK fell by one million bottles following the spring hike, which saw spirits duties rise with inflation.

The chancellor will unveil his autumn Budget on 22 November.

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