Scotland’s whisky industry has reacted with disappointment to another increase in spirits duty announced in Wednesday’s UK Budget, warning that the decision could threaten investment, jobs and businesses across the country.
The Scotch Whisky Association says the latest rise marks the fourth consecutive increase in spirits duty, adding further pressure to an industry already facing difficult trading conditions.
Its chief executive, Mark Kent, has criticised Chancellor John Healey’s decision, arguing that the growing tax burden is affecting not only distillers but also the farmers, suppliers and hospitality businesses that depend on the sector.
According to the association, taxes will now account for 74% of the price of an average bottle of Scotch Whisky sold in the UK.
The increase comes despite repeated appeals from the industry for the Treasury to reconsider how spirits are taxed compared with other alcoholic drinks.
In September, the association called for a reduction in duty, arguing that lower taxation could encourage investment and help reverse declining Treasury revenues from spirits.
The industry has also raised concerns about the cumulative effect of successive increases, particularly for smaller distilleries and businesses operating in rural communities.
For areas such as Speyside, Moray and the Highlands, whisky production is closely connected to local employment, agriculture, transport, tourism and hospitality.
The association argues that further increases risk weakening those connections at a time when producers are seeking greater confidence to invest.
Kent said:
“Today’s spirits duty increase announced by the Chancellor is a disappointing blow to the Scotch Whisky sector, its supply chain and the local communities it supports.
“Another duty increase, the fourth in as many years will see the tax burden on the average bottle of Scotch Whisky rise to 74%.
“Further support has been offered to small brewers and cider makers, excluding small producers in the spirits sector which is hugely important to the Scottish economy.
“The fact remains that consumers who don’t choose to drink pints and the hospitality businesses who rely on spirits as part of a diverse and modern offering are being unfairly penalised.
“We’ve repeatedly warned that increasing the spirits super tax will not only pile further costs on distillers, but will harm the supply chain and reduce Treasury revenue.
“Nobody wins when hard-pressed businesses are taxed to the hilt.”
“The UK Government should listen to business and pay attention to the evidence.
“We will fully consider the findings of the evaluation report published today and press the Treasury for systemic reform to provide greater fairness for Scotch Whisky.
“Today’s decision to increase duty, alongside the inherent imbalance at the heart of the current duty system, puts further pressure on the sector, stalls investment and ultimately limits our ability to generate growth.”
The Chancellor’s decision comes as the Government balances demands for additional revenue against calls from businesses for measures that encourage economic growth.
The whisky industry maintains that increasing duty can ultimately undermine that objective if higher prices weaken sales and discourage future investment.
The association has confirmed that it will examine the Government’s latest evaluation of alcohol duty and continue pressing the Treasury for changes to the taxation system.
For the communities whose livelihoods are closely connected to Scotland’s national drink, the concern is not simply the price of a bottle but the longer term consequences for jobs, local businesses and future investment.
