Concern Scotch whisky producers at 'competitive disadvantage' despite alcohol duty reform

The freeze of alcohol duty on spirits and a wider simplification of the tax has been cautiously welcomed by health campaigners and industry representatives.

The freeze on alcohol duty has been cautiously welcomed by the Scotch Whisky Association
The freeze on alcohol duty has been cautiously welcomed by the Scotch Whisky Association

During the Budget, Rishi Sunak announced major changes to alcohol duty which he labelled “outdated, complex and full of historical anomalies”, with the number of rates cut from 15 to six.

The Chancellor said the move would see stronger drinks such as spirits and whisky be hit by higher alcohol duty rates, with a lower rate of duty for draught beer and cider, cutting the tax by five per cent and dropping the cost of a pint by 3p.

This will come into force in 2023, with Mr Sunak confirming the planned hike in alcohol duty for spirits was cancelled at a cost of £3bn to the Treasury, leading to cautious optimism from the Scotch Whisky sector.

Chief executive of the Scotch Whisky Association, Karen Betts, said the freeze on duty would give “welcome relief” but said the devil would be in the detail in regards to the impact of the wider reforms.

She said: “By freezing duty, the Chancellor given welcome relief to all distillers, specifically in Scotland where 92% of all UK spirits are produced or bottled. It’s confirmation that the UK government wants to support one of Scotland’s most important industries and will take action to protect jobs, investment and exports, and to bolster the recovery in hospitality and tourism.

“But the UK government must go further if it’s to meet its promise to ensure the tax system is supporting Scotch Whisky. Despite the duty freeze, spirits are still taxed more than beer, wine and cider and we will now want to scrutinise the reform proposals announced by the Chancellor today.

"At first glance, [it] appears that Scotch Whisky will continue to be put at a competitive disadvantage against beer and cider through the tax system, rather being allowed to compete on a level playing field.”

Elinor Jayne, director of Scottish Health Action on Alcohol Problems, said the shift towards reform was a “significant step in the right direction” as the system in place does not support the aim of raising revenue while protecting public health.

She said: “It is recognised internationally that increasing price is the most effective way to reduce consumption of alcohol and the harms this causes.

"Therefore, to reduce alcohol harms and the personal and economic costs they entail, we will continue to press the Treasury to carry out a full scale reform so that the overall level of alcohol tax covers the cost of alcohol to health and society.”

Chairman of the Campaign for Real Ale (CAMRA), Nik Antona, said the tax relief of draught beer, cider and perry was a “gamechanger” which could lead to an increase in pub trade as the price of alcohol in supermarkets continues to rise.

He said: “We hope that pubs and producers will make sure drinkers see the impact of this revolutionary policy on the price of their pints, to encourage them to return to their locals.

“We look forward to campaigning for future reductions in Draught Duty, to make sure that consumers, brewers and publicans can enjoy the maximum benefits of this ground-breaking new policy.”

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