The UK’s Chancellor of the Exchequer Philip Hammond was delivering his first Budget as chancellor and the first since the UK voted to leave the European Union.
According to the SWA, s a result of today’s increase, the level of tax – excise duty and Vat – on an average priced bottle of scotch whisky is now an "onerous 79%", one of the highest levels in Europe, and 21% higher than in 2010. The excise duty burden on a 70cl bottle of scotch is £8.05 and the total tax is £10.20.
The SWA has called for a fundamental review of the alcohol duty system, describing the move as damaging to a major industry and at odds with the Prime Minister’s words during a speech in Glasgow last week, where she described scotch whisky as “a truly great Scottish and British industry”. The scotch whisky industry supports more than 40,000 jobs across the UK, many in economically fragile areas, and adds value of around £5 billion annually to the economy.
The increase goes against recent experience that a duty cut would boost the public finances. Following more supportive duty moves, revenue from spirits duty increased by 4.2%, or £132 million, to £3.25bn in 2016. The SWA also warned that a duty increase could undermine the recovery of the UK market for scotch.
Julie Hesketh-Laird (pictured), SWA acting chief executive, said: “A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress. Distillers will find it hard to understand why the Chancellor is penalising a strategically important British industry with this tax increase.
“At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit. Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law. The system is in need of a fundamental review and reform to make it fair and competitive.”
Miles Beale chief executive of the Wine & Spirit Trade Association said: “It is disappointing that the chancellor has failed to support a great British industry. He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.
“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help out struggling consumers.
The added uncertainty of another Budget in six months’ time is unwelcome and will further undermine business – and consumer – confidence,” said Beale.
Charles Ireland, managing director, Diageo Great Britain, said: “Today’s tax blow from the Chancellor is bad for the economy, bad for business and bad for the British public. It is staggering that the Prime Minister stood up in Scotland only on Friday and said that scotch whisky is “a truly great Scottish and British industry… and directly supports tens of thousands of jobs”, and just five days later her Chancellor hammers this industry at home.
"Tax on scotch whisky is now so high – nearly 80% of the price of an average bottle will go straight to the Government. We believe this duty rate increase will reduce total tax revenue. We are calling on the government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.”
Following the Chancellor’s announcement that all alcohol will be subject to inflationary rises the WSTA have worked out how this will impact on the price of wines and spirits.
The rate of inflation is 3.9%. This is calculated by using the RPI estimate for September 2017 provided by the Office of Budget Responsibility.
This means:
• Duty on a 75cl bottle of wine increases by 8p to £2.16
• Duty on a 75cll bottle of sparkling increases by 10p to £2.77
• Duty on a 75cl bottle of fortified wine increases by 11p to £2.89
• Duty on a 70cl bottle of vodka at 37.5% increases by 28p to £7.54
• Duty on a litre bottle of vodka at 37.5% increases by 40p to £10.78
• Duty on a 70cl bottle of gin at 40% increases by 30p to £8.05
• Duty on a litre bottle of gin at 40% increases by 43p to £11.50
The revised rates are due to come into effect after midnight, Sunday March 12.
The government will also introduce a consultation on a new duty band for still wine and made wine between 5.5% and 8.5% abv.
