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SWA: spirits drive alcohol revenue growth

The Scotch Whisky Association (SWA) is urging the UK government to rethink its planned spirits tax increase after finding the sector has driven alcohol revenue growth in the past decade.

SWA is urging the UK government to reverse the 10.1% duty increase on spirits

In April, the SWA launched the Keep The Commitment campaign to urge the UK government to re-think its planned spirits duty hike in August.

The campaign was created following UK chancellor Jeremy Hunt’s announcement that the government will increase duty of Scotch whisky and other spirits by 10.1% from August.

Through figures from government department HM Revenue & Customs (HMRC), the SWA said spirits revenue from excise duty grew to £4.12 billion (US$5.11bn) in 2022/23, an increase of 40% since 2013/14 when its revenue was reported as £3.05bn (US$3.78bn).

HMRC also reported that spirits now account for 33% of all alcohol revenue, up from 29% in 2013/14.

Chief executive of the SWA Mark Kent said: “The chancellor’s reference to ‘warm ale’ in his budget speech in March showed that out-dated views of the UK’s alcohol industry persist where the industry’s duty rates are set.

“Pubs and other on-trade businesses are about far more than beer and cider, and the modern consumer is looking for a premium experience, with the majority drinking less and drinking better over time.

“This suits the Scotch whisky industry, which is made to be measured and savoured, and these figures make clear that it also suits the government’s bank balance.

“Growing revenue by 40% over a decade when fewer units of alcohol have been consumed is an impressive return on the government’s investment in the industry through previous duty freezes. In contrast, at least the same tax support has been given to other alcohol categories but without the same benefit to treasury coffers.”

In the same 10-year period, from 2013/14 to 2022/23, beer saw revenue grow by 7% compared with spirits’ 40%, while cider revenue fell by 28%.

Cider has had the same tax treatment as spirits since 2013, while beer has been given an additional duty freeze.

Freezes boost government revenue

Kent continued: “HM Treasury would not have continued to support Scotch whisky at annual budgets if it was not beneficial to the public finances.

“The official HMRC figures show that previous freezes have driven government revenue, and the spirits category has driven this growth as the increasing choice of the modern consumer.

“The industry wants the commitment the government made to distillers to be honoured. These figures should be a wake up call for the chancellor to cancel the retrograde tax hike and once again support Scotch.”

The new figures ‘remove any doubt’ spirits duty freezes have ‘benefited’ the HM Treasury revenue, said SWA, and demonstrate that ‘supporting spirits like Scotch whisky’ through the tax system brings ‘greater fiscal benefits’ than supporting other alcohol categories.

The Keep The Commitment campaign requests not only the reversal of the 10.1% duty increase, but the immediate inclusion of distillers in the Energy Bill Relief Scheme, and the UK government to commit to ensuring the tax system is supporting the Scotch industry.

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