The increase in duty on Scotch whisky and other spirits, coming into force on 1 August, is expected to be in line with inflation at 10.1 per cent – one of the largest tax rises for the sector in recent years. It was announced by chancellor Jeremy Hunt in his Budget on Wednesday alongside duty increases for other alcoholic drinks including wine.
Calculations by the SWA say that the new duty rate on spirits, rising to £31.64 per litre of pure alcohol, will increase the tax burden on an averagely priced bottle of Scotch whisky (£15.22) from 70 per cent to 75 per cent. The industry body says the duty hike will have negative effects for producers, consumers, and the hospitality industry – the latter received a tax break in the Budget for the service of draught products, but this section of the market is almost exclusively populated by beer, cider and wine.
It comes at a time when the Scotch whisky industry is already facing controversial and potentially costly changes to advertising and packaging regulation, and also seems to contradict a recent pledge by the UK government to "review alcohol duty to ensure our tax system is supporting Scottish whisky".
The government has said that there will be transitional arrangements for products hit hardest by the duty increase.
Mark Kent, SWA chief executive, called on MPs to reject the "unjustifiable" tax hike and "demonstrate their support for the Scotch whisky industry".
"We have been clear with the UK government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way," he said.
"The industry continues to grapple with significant domestic headwinds, including the soaring cost of energy, intense pressure on the hospitality sector, and increasing regulatory burdens like the Deposit Return Scheme. This tax hike just adds to the pressures on the sector and breaks the UK government’s commitment to support Scotch."
Nuno Teles, managing director of Diageo GB, which owns and operates close to 30 whisky distilleries in Scotland, said: “The decision is a hammer blow for pubs, drinkers and for Scotch, a UK homegrown industry supporting tens of thousands of jobs. We urge the chancellor to reverse this punitive and inflationary tax hike.”