Scotch Whisky Association | Burns' Night puts Scotch Whisky tax on Chancellor's radar | 23rd Janaury, 2015

Small distillers across Britain have joined forces to call on George Osborne to cut the rate of duty on alcohol to facilitate growth of the industry.   

Distillers from across the UK have come out in support of the ‘Drop the Duty!’ campaign which is being run by the Scotch Whisky Association (SWA), Wine and Spirit Trade Association (WSTA) and supported by the TaxPayers’ Alliance. The campaign is calling for a 2% cut in alcohol duty at the next UK Budget in March 2015. 

A 2% cut in duty would provide an additional £1.5 billion to the Treasury through increased investment across the industry, greater income from corporation tax and VAT, and from the benefits of jobs created in pubs, bars, restaurants, shops and the wider supply chain. 

UK consumers currently pay nearly 80% tax on an average priced bottle of spirits and almost 60% on an average priced bottle of wine. This equates to consumers paying £10.06 in tax on an average bottle of whisky. The British public is also against this tax, with 84% saying that this level of tax on Scotch Whisky and other spirits is unfair.  

Today, the UK’s smaller producers outlined how these punitive tax rates are stifling their growth ambitions. Commenting on the campaign, Dom Roskrow, director of the Craft Distillers’ Alliance (CDA), said:  “The UK spirits industry has grown rapidly over the last 18 months largely due to the successes of craft distillers.  Up and down the country there are small distilleries creating jobs, boosting tourism and raising tax revenue in towns and cities. The government should be doing all it can to develop and encourage growth in this industry rather than focusing on punitive tax measures.” 

Similarly, Ian Hart, founder of Sacred Spirits Company in London who specialise in gin production, explained the devastating impact the almost 80% level of tax has on the industry:  “Our burgeoning craft spirits industry is significantly held back by the current exorbitant duty regime.  We are characterised by small balance sheets and cannot finance the duty cashflows required under the present scheme. Growth is severely hindered, while craft distilleries in other countries have an easier time of it.  We are stifled by duty at the current level.  We can barely get started, let alone finance exports due to UK duty outflows.” 

Demonstrating his support for the Drop the Duty! campaign, Stephen Davies, Managing Director of Penderyn Distillery in the Brecon Beacons National Park, commented: “As a craft distiller in the UK, we feel the strain of the alcohol duty on our business. The spirits we produce are of high quality, and have a reputation to match, however such punitive tax puts constraints on our growth. We support the ‘Drop the Duty’ campaign in their efforts to reduce alcohol duty and give distillers like us the support we need to be part of a successful home-grown industry.”

Anthony Wills, founder and manager director of Kilchoman Distillery on Islay, added “The whisky industry welcomed last year’s duty freeze, but with tax still accounting for nearly 80% of an average bottle’s price more action is needed.  The UK is vital for many new and small distillers, both as a key market but also a base to grow exports in the future. A 2% duty cut would be a significant boost to investment in the sector.”   

David Frost, Scotch Whisky Association chief executive, summarised the objectives of the campaign, commenting “Small distillers and British consumers are being unfairly penalised.  Not only is the spirits tax rate the fourth highest in the European Union, it is double the rate applied in France and two and a half times higher than in Germany.  We are calling on the Chancellor to build on last year’s duty freeze to support an important, home-grown industry.” 

The ‘Drop the Duty!’ campaign wants supporters to email their local MP and ask them to write to the Chancellor through www.droptheduty.co.uk calling for the alcohol super tax to be reduced by 2% in the March Budget.

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