SWA urges UK Government to abolish alcohol duty escalator

18 Dec 2013

The Chancellor should 'Call Time on Duty' to be fair to the industry and consumers

Chancellor George Osborne should scrap the alcohol duty escalator which is damaging the Scotch Whisky industry in its domestic market and punishing hard-pressed consumers.

The Scotch Whisky Association (SWA) is urging the UK Government to 'Call Time on Duty' in next year's Budget. Such a step would recognise the massive contribution of the Scotch Whisky industry to the UK economy and help people who have seen their cost of living spiral in recent years.

The 'Call Time on Duty…Be Fair George' campaign, of which the SWA is a member, launches today to encourage consumers to raise the issue of the alcohol duty escalator with their MPs. The escalator is putting further pressure on household budgets at a time when figures from the Office of National Statistics show salaries are failing to keep pace with the cost of living. The campaign is calling on the UK Government to freeze all alcohol duties and scrap the escalator.

Scotch Whisky exports reached £4.3 billion last year - 25% of UK food and drink exports - but the Government continues to penalise the industry in the UK through the alcohol duty escalator. Tax and VAT now form 79% of the price of an average bottle of Scotch Whisky sold in the UK.

Scotch Whisky sales have declined by 12% in the UK over the last five years since the introduction of the escalator. UK sales volume dropped from 102 million bottles of Scotch Whisky in 2007 to 90 million bottles in 2012.

The alcohol duty escalator was introduced in March 2008 with duty being increased by 2% above the rate of inflation each year. Tax on Scotch Whisky has increased by 44% over five years.

In the 2013 Budget the Chancellor decided to single out one part of the alcoholic drinks industry and remove the duty escalator from beer, along with a cut in beer duty. As a result, drinkers of a dram are now paying about 50% more duty than a beer drinker for the same amount of alcohol.

Independent research by consultancy firm EY shows the UK Government would also gain from scrapping the escalator across the board as the drinks industry's contribution to public finances would increase by £230 million in 2014 alone.

Gavin Hewitt, SWA chief executive said, said: "Our message is clear - it is time to be fair to consumers and the Scotch Whisky industry. Tax at almost 80% on the price of a bottle of Scotch Whisky is unjustifiable. It penalises consumers. It also harshly treats the Scotch Whisky industry which is vital to the UK's export performance. The UK is near the top of the league table in taxing alcohol. This sends the wrong message to overseas governments when they consider their tax treatment of Scotch Whisky imports."

People can find out more about the 'Call Time on Duty' campaign here www.calltimeonduty.co.uk

ENDS

NOTES TO EDITORS

For more information contact Rosemary Gallagher, Scotch Whisky Association communications manager on 0131 222 9230/07432 605 385 or email rgallagher@swa.org.uk

The 79% figure for tax and VAT is calculated on an average bottle of Scotch costing £12.70

The SWA is joined in the Call Time on Duty campaign by the Wine and Spirit Trade Association and the Taxpayers Alliance.

For more information on the campaign please visit www.calltimeonduty.co.uk

For more information on the SWA visit www.scotch-whisky.org.uk and follow us on Twitter @ScotchWhiskySWA