Scotch whisky chiefs are calling on Rishi Sunak to give the industry a boost and slash spirits duty in his March budget.
The sector has been battered by US export tariffs and the pandemic over the last year, putting the future of many distilleries at risk.
Industry insiders have said a 5% cut in taxes would give some vital breathing room and would also aid the Chancellor in his mission to rally the economy.
According to an analysis of alcohol taxation, conducted by the Centre for Economic and Business Research (Cebr), a 5% tax cut would generate an additional £748m in duty and VAT over a three-year period for the Treasury.
Karen Betts, Scotch Whisky Association boss, said: ” The last year has been very challenging for the Scotch Whisky industry, with the combined impact of Covid-19 and US tariffs.
“Scotch Whisky producers, large and small, are facing considerable losses and, as a result, we are urging the Chancellor to cut spirits duty in the budget.
“A cut in duty will also help the hospitality sector, with pubs, bars and restaurants across the UK crying out for continued support.”
She added: “The industry is not going cap in hand to the Chancellor – but in order that we can be a partner in recovery the Chancellor must use the tax system to help grow the economy.
“A cut in spirits duty will deliver additional revenue for the government as well as supporting our industry as we absorb millions of pounds of losses as a result of UK Government subsidies to aerospace.
Tariffs are damaging the exports and plans of distillers on both sides of the Atlantic – over £400m has been lost in #ScotchWhisky exports to 🇺🇸 alone.
We want administrations to #CallTimeOnTariffs as soon as possible: learn more here 👉 https://t.co/x2ft7rfNTr pic.twitter.com/y2kNbpv7i8
— Scotch Whisky Association (@ScotchWhiskySWA) January 17, 2021
“With £450 million in losses to date, and counting, jobs and businesses are now at risk, in Scotland and throughout our UK supply chain.
“The industry needs a package of support from the UK Government while distillers continue to face crippling tariffs, and the Chancellor can start by cutting duty in the budget.”
Fifth time lucky?
Following talks with Boris Johnson over the past week, the Chancellor is expected to use the budget on March 3 to announce an extension of government support, including the furlough and business loan schemes.
There are also reports Mr Sunak is planning to replace both council tax and stamp duty with a national property tax.
If the Chancellor were to reduce sprits duty, it would only be the fifth time the Treasury has cut alcohol taxes in the past 100 years.