Call for a Fairer Tax on Scotch Whisky: SWA Urges Government Action

The Scotch Whisky Association (SWA), an advocacy group representing Scotch whisky producers, has called upon the next UK government to reverse last year’s increase in excise duty on spirits. The SWA claims this increase has had unintended consequences, costing the Treasury more than £100 million.

whisky in glass

The Impact of the Duty Hike

The SWA reports that tax revenues from spirits sales have decreased by £108 million from August 2023 to March 2024 compared to the same period the previous year. This decline is attributed to the 10.1% rise in excise duty implemented in August 2023, the largest increase in over 40 years.

Graeme Littlejohn, SWA’s Director of Strategy and Communications, commented on the situation: “Month by month it becomes more clear that the double-digit tax hike on Scotch whisky and other spirits has backfired. It slowed the fall of inflation and has reduced revenue by over £100 million.”

The Case for Lowering Excise Duty

The UK has the highest duty on spirits among the G7 nations, and nearly three-quarters of the cost of a bottle of Scotch is claimed in tax. The SWA is advocating for the next government to freeze further increases and align excise duty with the European average over the course of the next parliament. Littlejohn emphasised, “The first budget of the new parliament should start to unwind this damaging tax increase and reduce the tax burden on Scotland’s national drink.”

Although the alcohol duty has been frozen until February 2025, the incoming government may reverse any such freeze in the first budget of the government. 

Economic Importance of Scotch Whisky

Scotch whisky is a significant contributor to the Scottish and UK economies. Generating £7.1 billion annually, with £5.6 billion in exports, the industry also attracts over two million distillery visits each year. Recent polling by Survation revealed that: 

  • 86% of Scots view Scotch whisky as crucial to the Scottish economy
  • 90% recognising the importance of Scotch for exports
  • 91% acknowledge its role in tourism
  • 85% of Scots believe that Scotch whisky tax should be lowered or stay the same

Mark Kent, Chief Executive of the SWA, underscored the industry’s economic impact: “Scotch Whisky is a cornerstone of the Scottish economy. This poll shows that Scots recognise that and want candidates across political parties to recognise it too. That means ruling out further increases in excise duty after last year’s devastating tax hike, which has ultimately cost the Treasury over £100m, money that could’ve been used to support public services.”

Calls for Policy Alignment and Sustainability Support

Beyond tax issues, the SWA is also calling for government support in achieving sustainability goals. The industry has an ambitious strategy focusing on:

  • water use 
  • land use
  • circular economy 
  • climate impact

The SWA urges the government to provide better access to renewable energy, improve grid connectivity, and promote recycling initiatives to support the industry’s environmental objectives. Read the SWA whisky manifesto here.

Export Growth and International Trade

The SWA also seeks governmental support in enhancing international trade. The association is pushing for the permanent removal of US tariffs on single-malt Scotch Whisky and emphasises the need for proactive engagement in international trade forums like the WTO and WHO. The SWA believes these actions are vital for the continued growth of the Scotch whisky industry and its contribution to the UK’s global economic presence.

Conclusion

The Scotch whisky industry supports 66,000 jobs in the UK, including 41,000 in Scotland, with 14,000 directly employed in the industry. The SWA’s call for a more favourable tax regime, aligned sustainability policies, and proactive trade support highlights the crucial role of government action in securing the future of Scotland’s iconic industry. 

The association hopes that by addressing these issues, the next government will ensure the industry’s continued growth and its positive impact on the UK economy. These include further investment in the industry. 

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