1 week Ago By Alexander Brown
Rachel Reeves has been urged to reverse the damage caused by Jeremy Hunt’s 10.1 percent tax on Scotch last August, after analysis showed it saw tax revenue plummet. Fresh analysis from the independent Office for Budget Responsibility saw the forecaster cut its prediction for alcohol duty revenue by £349 million since the duty hike.
Commissioned by the Scotch Whisky Association (SWA), the research suggests he increase in spirits duty imposed by Mr Hunt has already cost the Treasury £298 million in the 12 months since it came into effect on 1 August 2023 (compared to duty revenues during the period 1 August 2022 to 31 July 2023), according to figures from HMRC. Now ahead of the Chancellor making her speech at the Labour party conference in Liverpool, the SWA has urged her to reverse the hike. Mark Kent, Chief Executive of the Scotch Whisky Association, said: “Whilst the OBR plays an important role in the Budget process, the evidence doesn’t lie – when it comes to spirits duty, its forecasts have been incorrect for the best part of a decade.
Assumptions that a further increase in duty will generate more for the economy have consistently proven unfounded. Last year’s 10.1 percent duty increase by Jeremy Hunt has cost the Treasury nearly £300 million that should’ve been available to support public services.
“We urge the Chancellor to reverse the damage caused by her predecessor. The Prime Minister has pledged to back Scotch Whisky distillers to the hilt and that must begin at home. The Budget is an opportunity to deliver on that commitment, and the evidence is clear that supporting this iconic industry will deliver more for the economy that another harmful tax increase.
” The SWA analysis also found that the OBR has incorrectly predicted the amount generated by spirits duty every year for the last eight. Six cuts or freezes to duty during the last eight years were found to have generated more money for the public finances than expected by the OBR, whilst two tax increases had generated less than predicted. The duty increase was the biggest tax hike of its kind in more than four decades and led to the largest contribution to inflation from alcohol on record, inflicting unnecessary economic harm at a time when businesses and households were all struggling.
UK duty on Scotch is currently the highest of any country in the G7 and the fourth highest in Europe – double that of France and four times that of the United States. The Prime Minister Sir Keir Starmer has previously pledged to back Scotch Whisky distillers “to the hilt”, while the Scottish Labour leader Anas Sarwar has made public his own concerns over the hike. Asked by The Times if the Chancellor would listen to the industry's calls for reductions in duty, he said: "Look, I'm not going to write the chancellor's budget.
That wouldn't be appropriate. "I imagine there are lots of things that are in the discussions. But in my conversations with Rachel, we specifically spoke about the whisky industry in Scotland, and we spoke about the soft power of Scotland and selling brand Scotland in terms of our trade opportunities and that's something that she accepts and respects.
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