UK government urged to end 80% Scotch ‘supertax’

As the UK scrambles to assemble a new government following the most recent general election, the SWA has laid out its campaign priorities urging ministers to support the scrapping of an 80% ‘supertax’ on Scotch.

The UK is known for having some of the highest taxes on alcohol in all of Europe, with spirits, including Scotch, bearing the brunt. Currently, 79% of the cost of an average bottle of Scotch is made up of tax. In comparison, 56% of the cost of a bottle of wine now goes on duty, equivalent to £2.16, rising to £2.77 for a bottle of sparkling wine.

With regard to spirits, the SWA argued in February  that a 2% would cut give the domestic Scotch market a boost, as well as jobs and investment within the Scotch whisky industry and its UK supply chain. Its calls were not heeded in the 2017 Spring Budget, with tax on spirits instead rising with inflation, piling more tax on Scotch, and all spirits.

It followed a freeze on spirits duty in 2016, and a cut of 2% in 2015, which was only the fourth time in the last century that duty on Scotch has been cut, however the SWA says these measures, while welcome, did not go far enough to support the industry.

Justifying its calls for a cut, the SWA pointed out that following a 2% cut to spirits duty in 2015, spirits revenue in 2015/16 increased by £123 million to £3.15 billion, with spirits revenue now £155m higher than when the duty escalator was ended in 2014, arguing that a further cut would be beneficial to both the industry and government coffers.

Describing the current level of duty and excise tax imposed on Scotch, and spirits, as “onerous”, the SWA said the near-80% tax burden is “holding the industry back” at a time when, particularly because of the pressures brought by Brexit, the UK Government “should be supporting domestic industries to enable them to flourish and to increase their exports”.

“Scotch Whisky is an industry of huge importance to the UK, which supports over 40,000 jobs and exports more than £4 billion worth of whisky to 182 markets overseas every year,” said
Karen Betts, Scotch Whisky Association chief executive.

“However, our success is not a given. So we are urging politicians at Westminster and Holyrood to work with us to deliver a Brexit that supports our future export growth and creates a more competitive domestic environment. As part of this, we want to see a cut to the near-80% ‘Scotch Supertax’. Scotch has been a highly successful great British export for many years but its treatment in its home market is damaging its ability to grow at home and to sell overseas.”

The SWA is urging the Treasury to take action to reduce the Scotch Supertax in the Autumn Budget.

UK Excise Duty on alcohol

Rates per bottle from 13 March 2017 (excluding VAT @ 20%)

Figures are approximate due to rounding up – from 08.03.2017

Source: WSTA