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SWA urges tax breaks for spirits
The Scotch Whisky Association (SWA) is calling on the UK chancellor to rule out a further tax increase on spirits ahead of the double-digit duty rise tomorrow (1 August).
On 1 August 2023, the UK government will introduce a new alcohol tax system, whereby duty on Scotch and other spirits will increase by 10.1%. The move was announced during the UK’s spring budget by chancellor Jeremy Hunt in March.
The SWA said the double-digit increase means the tax burden on an average-priced bottle of Scotch will rise from 70% to 75%. The group said the duty rise would be the biggest for the category in 40 years.
After the budget announcement, the trade group launched the #KeepTheCommitment campaign to urge the chancellor to reverse the duty increase.
Despite the campaign, and HMRC revenue data that shows that spirits duty revenue to the Treasury has risen by 40% over the past decade after tax cuts and freezes for the category, the UK government has chosen to continue with the duty hike, the SWA noted.
SWA director of strategy Graeme Littlejohn called the increase a “hammer blow for distillers and consumers”.
The trade group believes the move will ‘fuel inflation’ during a time where businesses are planning to invest in their growth and consumers are dealing with the cost-of-living crisis.
Littlejohn continued: “At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.”
Ahead of the next budget in autumn, the SWA is calling on the chancellor to rule out a further tax increase over the duration of this Parliament, and work with the industry to ensure that tax breaks are made available to the spirits sector, as they currently are for beer and cider.
Draught relief will be available to products sold in the on-trade that are under 8.5% ABV.
Littlejohn warned that distillers face a “competitive disadvantage” in the on-trade as they are “unfairly excluded from tax breaks”.
“HM Treasury had a choice to make,” Littlejohn continued. “Rather than choosing to back an industry which the UK government promised to support through the tax system, the government has chosen to impose the largest duty increase in almost half a century, increasing the cost of every bottle of Scotch whisky sold in the UK by almost a pound and taking the tax burden on the average-priced bottle to 75%.”
In March, the Wine and Spirit Trade Association calculated how much spirits will cost in the UK from 1 August. A 10% increase would add a further 75p to a bottle of vodka.