Last week, we advertised the release of Three Quarters – an exclusive Scotch whisky that spoke to the heritage and quality of a world-renowned industry.
A loving tribute to the skill, care and innovation that goes into every bottle from every Scotch distillery. A unique blend, unlike anything else on the market.
And this is completely true – there is nothing like Three Quarters on the market. It’s not for sale. It’s not available.
But Three Quarters isn’t a fake whisky. Actually, every Scotch whisky is three quarters – because that’s how much of the cost of the bottle the UK chancellor claims in tax.
On Wednesday, Jeremy Hunt will stand at the despatch box and deliver his autumn statement. His and the prime minister’s decision on alcohol duty will have already been taken, but the choice they faced is this: back a globally recognised, leading industry with a proven record of investing in the UK, supporting jobs and delivering for the public finances. Or, condemn distillers, the businesses they support and, ultimately, consumers to a second, unjustifiable hike in alcohol duty in less than six months.
Having already imposed the largest increase in excise duty in 40 years from August, that would see the industry hit with an additional £100 million tax burden.
The Treasury will tell you that duty on Scotch has been cut or frozen in the last nine out of 10 budgets. That it has supported distilleries in the most rural communities by getting US tariffs on Scotch removed. And that the industry must pay its share.
Such an argument borders on facetious – because the industry is paying its share.
Distillers haven’t taken a single cut or freeze in duty for granted. They invested in the national economy and built tourist centres that attract visitors to local communities and drive revenue for other businesses. They’ve innovated and created new products, reflecting and driving consumer demand for premium drinks and experiences. They’ve grown the tax revenue the Treasury receives from Scotch and other spirits by more than £1 billion.
And they’ve done so despite rising production costs, being excluded from the government’s energy support scheme (which ministers opened up to brewers and cider makers), and the loss of £650 million in exports to the US over a trade dispute that had nothing to do with Scotch.
Patrons of bars in Paris pay half the tax on a dram that punters in an Edinburgh pub are subject to
There should be no decision to make – another increase in excise duty on Scotch should be unjustifiable. Consumers already endure the burn at the end of a dram, given three quarters of the cost is claimed in tax. There is no reason to make that even higher.
Duty on Scotch in the UK is higher than in any other country in the G7, and the fourth highest in Europe. Patrons of bars in Paris pay half the tax on a dram that punters in an Edinburgh pub are subject to. That is a pretty damning indictment of a lack of support for domestic businesses – especially given their commitment to growth, which delivers more revenue for the Treasury.
A tax hike on Scotch cannot be reconciled
Fairness should be a good enough reason for the chancellor to put any plans for a further tax raid on Scotch on ice. But there is one final reason duty shouldn’t go up in the autumn statement, which is Jeremy Hunt’s and Rishi Sunak’s pledge to reduce inflation.
Duty on Scotch and other spirits rose by 10.1% from August 1. The Office for National Statistics has said that caused the single largest contribution to UK inflation because of alcohol on record. This is the writing on the wall – a tax hike on Scotch cannot be reconciled with what the chancellor and prime minister have said is their primary mission.
There might not be an available Three Quarters Scotch whisky, but it should serve as a reminder. Of a wonderful, globally respected sector. Of fantastic businesses delivering for the economy. And, unfortunately, of a very high tax burden. Distillers are hoping it is not made worse on Wednesday.
Mark Kent CMG is chief executive of the Scotch Whisky Association