Distillers say excise duty rise will stifle growth – Daily Business

Whisky distillers have criticised a hike in duty which has come into effect just days after Sir Keir Starmer was hailing a tariff deal with China.

A 3.66% rise in excise duty on alcohol came into effect yesterday, meaning the total tax on an average bottle of Scotch has risen from £10.58 in 2023 to £12.45.

Mark Kent, chief executive of the Scotch Whisky Association, said this was a cumulative increase of 18% in less than three years.

“Our sector has warned that repeatedly raising excise duty leads to stifled growth, and we are seeing that come to pass, not just for Scotch Whisky producers, but for the wider supply chain and hospitality sector,” he said.

“Continually pushing up spirits duty also costs the public purse, as evidenced by the Office for Budget Responsibility downgrading its own spirits receipts forecast by over £600m late last year. 

“Distillers need domestic support and stability to help weather the headwinds we are seeing in key global markets, and fair tax here at home is in the government’s gift to deliver.

“This year’s review of excise duty is an opportunity for the government to provide that stability, with a fair duty system that does not punish spirits producers but supports their ambitions for growth and investment.” 

Sir Keir Starmer last week secured a cut in the tariff on whisky imposed by China from 10% to 5%, worth £250m over five years and effective from today. China is currently the tenth largest market by value for Scotch whisky exports.

However, distillers and other business leaders say they need to see action taken to tackle tax levels in the UK.

Charandeep Singh, chief executive of the Scottish Chambers of Commerce, said: “The success and prosperity of many sectors across Scotland’s economy depend on that of the Scotch Whisky industry — from the farmers who grow the grain to the bars, pubs and restaurants who serve the finished product.”

He said the rise in excise duty will increase costs for businesses across that supply chain, all of which are already under significant pressure. 

“It’s important that government listens to the concerns of the businesses behind Scotland’s national drink and creates a domestic environment that supports, rather than limits, their ambitions for growth,” he added.

Wendy Chamberlain, MP for North East Fife and chair of the Scotch Whisky All Party Parliamentary Group said: “It’s clear that today’s rise in duty – the third in less than three years – doesn’t just hit distillers, but the economies and communities across Scotland that they support through jobs, investment and tourism.

“With over 70% of UK spirits produced in Scotland, the spirits duty rise also disproportionately impacts businesses here, from the Central Belt to the Highlands and Islands.

“It’s vital that the UK government uses this year’s excise duty review as an opportunity to support Scotch Whisky producers with a fair and balanced tax system, which in turn will boost growth and prosperity for communities throughout Scotland.”  

Ian Palmer, founder of InchDairnie Distillery in Fife, chairman of InchDairnie Whisky Co, and SWA Council representative, said:?“Businesses like mine need fairness and breathing space here at home to be able to weather significant challenges in our international markets.

“Investing in expansion and employment for the long term requires stability right now, not crippling tax rises that go up indiscriminately every year, severely impacting our confidence and plans for the future.

“Distillers need to know the government’s domestic agenda is on their side, which will enable us to take full advantage of the international export opportunities on the horizon.”