Spirits tax cut gives £96m treasury boost

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Spirits tax cut gives £96m treasury boost

Postby rebeccaparagraph » Wed Jan 27, 2016 1:13 pm

The Scotch Whisky industry has toasted the success of last year’s historic cut in excise duty – revealing it contributed to a £96 million increase in revenue from spirit drinks for the Treasury.

The Scotch Whisky Association (SWA) went on to call on the UK Government to do more for the whisky industry – which supports more than 40,000 jobs in the UK – and pave the way for a further boost to the Treasury’s income by cutting duty again in this year’s Budget. Tax – excise and VAT – on an average priced bottle of Scotch Whisky currently stands at the onerous level of 76%, despite last year’s cut.

The industry wants to see ‘Fair Tax For Whisky’, issuing a call to action to ‘Stand up for Scotch’, and is asking the Chancellor for a 2% cut in excise in the March Budget. The British public also supports the move – with 76% of adults independently polled on behalf of the SWA supporting a further cut in duty this year.

The SWA explained that while last year’s decision was a step in the right direction, it was the first cut in spirits duty in almost 20 years and was only the fourth time that tax on whisky has been cut in the last century. It contributed to the £96m increase in revenue from spirit drinks to the Treasury between April and December 2015, compared with the same period in 2014. Revenue jumped 4% from £2,401m to £2,497m.

David Frost, chief executive of the Scotch Whisky Association, says: “The Government’s own figures tell a simple story: when tax is too high, if you cut it, revenues go up not down. Along with the British public, we believe that the current tax of 76% on a bottle of Scotch is too high. An ordinary drinker will hand over almost ten pounds in tax on each bottle they buy. We would like to see a 2% cut again this year.

“George Osborne listened to the industry last year when we said that a cut on duty would increase confidence, safeguard jobs, help consumers, and thereby ultimately benefit the Treasury.

“We now have the figures to prove it. That’s why this year we are asking the Chancellor to continue what he has started. Deliver fair tax for whisky, free the industry to invest and grow, and feel the benefit through increased revenue.

“It really is common sense to stand up for Scotch.”

The support for the industry signalled by the Chancellor in 2015 boosted confidence in the sector, leading to more jobs and investment, including in some of the UK’s most fragile rural and urban communities. Seven new distilleries came on stream in the last year and between 30 and 40 new ones are planned. It also increased revenues for HM Treasury, with spirits revenue up by 4% or £96m, between April and December 2015 on the same period in 2014.

Jonathan Isaby, chief executive of The TaxPayers’ Alliance, says: "Piling taxes onto spirits hits those on lower incomes the hardest, only adding to the cost of living.

“Last year’s bold move by the Chancellor helped the industry and the ordinary drinker but also saw a boost for the public finances, which was a clear demonstration that cutting taxes can increase revenues.

“Mr. Osborne would do well to give taxpayers and businesses another timely boost at the coming Budget."

Key points about the Scotch Whisky Industry:

• The sector creates jobs but also supports thousands of people who work in hospitality, retail and logistics industries the length and breadth of the UK. It supports more than 40,000 jobs across the UK.

• George Osborne’s 2015 Budget cut of 2% on excise duty gave a boost to the 117 Scotch Whisky distilleries and across the UK supply chain.

• Scotch is already a great British success story, generating £5 billion in value each year.

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