The tax increase applies to all alcoholic drinks, that are more than 1.2% abv, sold in the UK with the exception of a 1.7% reduction afforded to drinks sold by draught in the on-trade.
The decision has been met with anger among broad sections of the UK drinks industry with commenters indicating that these new measures don’t align with the new government’s campaign messaging.
“On the campaign trail, Keir Starmer pledged to ‘back the Scotch whisky industry to the hilt’,” said Nuno Teles, managing director of Diageo GB.
“Instead, the Government has broken this promise and slammed even more duty on spirits. This betrayal will leave a bitter taste for drinkers and pubs while jeopardising jobs and investment across Scotland.”
The new duty promises to take the minimum tax burden on a bottle of scotch above £12 for the first time, the highest of any G7 country.
Prior to the budget announcement, the Scotch Whisky Association (SWA) had urged the Reeves to reverse the 10.1% duty increase that hit the spirits industry in August 2023.
“On the back of the 10.1% duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose,” said chief executive of the SWA Mark Kent.
“It will damage the Scotch Whisky industry, the Scottish economy, and undermines Labour’s commitment to promote ‘Brand Scotland’. She has also increased the tax discrimination of spirits in the Treasury’s warped duty system, and with 70% of UK spirits produced in Scotland, that will do further damage to a key Scottish sector.
“The disastrous 10.1% duty hike last year has now been compounded. This further tax rise means the lessons have not been learned, and the Chancellor has chosen continuity with her predecessor, not change.
“We urge all MPs who support scotch whisky to vote against this duty hike and tax discrimination of Scotland’s national drink.”
Other commentators have also questioned the benefit of the 1.7% reduction on draught alcohol in the on-trade sector.
Commenting on the tax changes, Dr Christopher Snowdon, head of lifestyle economics at the Institute of Economic Affairs, said: “Cutting draft beer relief so that a pint in a pub is 1p cheaper doesn't come close to compensating from this tax raid. Drink 600 pints and get one pint free? It is a cheap gimmick.”
