The Scotch Whisky Association has demanded a lowering of the duty on the nation’s primary export after issuing a statement detailing how sales have fallen by over one million bottles over the first six months of 2017.
According to the group, the drop in sales could be put down to an increase in duty of 4% which applies to spirits, one of the several tax-raising measures added by the chancellor, Philip Hammond, in his March budget.
Industry figures demonstrate that the price of an average bottle of Whiskey sold is made up of more than 80% tax.
According to an article in the Guardian: “Official HMRC figures show 36.7 million bottles were released for sale in the first six months of 2017 – down from 37.7 million in the same period last year.”
“However, the industry trade body said the tax hike didn’t appear to be working, as it cited a decline in tax revenues from spirits of more than 7% to £697 million ($926 million) from £751 million ($998 million) in the first three months of the financial year.”
Karen Betts, chief executive of the association, said: “The quarterly HMRC figures showed that the Treasury had made an error.”
“Philip Hammond’s damaging 3.9% spirits duty hike has hit UK demand for Scotch and seen less money going to the Treasury,” she said. “The chancellor should use his November budget to drop the dram duty and boost a great British success story.”
“The Whisky industry supported 40,000 jobs and played a key role in Scotland’s economy, accounting for more than £4 billion ($5.3 billion) in exports. Scotch is Britain’s biggest food-and-drink export by far, with chocolate sales of £660 million ($878 million) a distant second.”
Adding to the comments made by Karen Betts, Charandeep Singh, spokesman for the Scottish Chambers of Commerce, told a group of reporters: “The Scotch Whisky Association is right to highlight the damaging effect that the hike in spirits duty has had on Scotch sales within the UK.”
“Keeping Scottish industries competitive, particularly those which embody the vision of an international trading nation, must be a priority for the UK government. We urge the Chancellor to review the tax on spirits duty to ensure that the Scotch Whisky industry continues to be a leading force of the UK food and drink sector on the international stage.”
The unprecedented levels of damage inflicted upon the domestic sales figures of Scotch Whisky come after years of declining sales. With competition from ‘new world’ distillers such as those in Japan, Taiwan, and even the United States, Scotch Whisky’s export and sales figures have both plummeted.
According to Betts, the Treasury should look to copy the example set in 2015, which included a significant cut in duty on the coveted alcohol. A 2% reduction in duty two years ago led to spirits revenue increasing by 4%, meaning that the Treasury was given a £124 million ($165 million) windfall.
A Treasury spokesperson said that the majority of Scotch Whisky, up to 90% in fact, is exported, meaning that the effects of the move will not be so heavily felt: “We recognize the importance of the Scotch Whiskey industry. In the UK, tax on a bottle of Scotch is 90p lower now than it would have otherwise been, thanks to duty freezes.”