SNP could bring in whisky tax to help combat cost-of-living crisis

The SNP will consider a proposal to introduce a whisky tax in a bid to combat the cost-of-living crisis, it can be revealed.

A domestic whisky production levy was said to have the potential of raising more than £1 billion for the Scottish Government’s budget when it was proposed almost a decade ago.

Such a levy could either be a windfall tax on the profits of whisky distillers across Scotland or an extra payment on the price of each bottle – for example, £1 a bottle.

Industry experts labelled the policy “bizarre” and questioned why the SNP would want to tax such a heavily taxed industry further.

The tax burden on a bottle of Scotch whisky is already 70 per cent due to high rates of excise duty.

The proposal has been submitted for debate at the SNP’s national conference in Aberdeen in October by the SNP’s Trade Union Group and the Southside Central Branch of the party.

If passed, it will ask the Scottish Government to speak to trade unions about the possibility of using devolved taxation powers to implement a whisky levy.

The SNP could be set to introduce a whisky tax if a proposal for their party conference is approved by the membership.

This would take place as part of a feasibility study examining the proposal of a whisky tax, the profits of which would then be used to tackle the cost-of-living crisis.

The resolution, seen by The Scotsman, reads: “Conference recognises that Scotland is facing a cost-of-living crisis due to the lack of appropriate action by the Treasury of the United Kingdom, and that consequently the decisions made by the Treasury of the United Kingdom will be a key argument in the case for an independent Scotland.

“Conference also recognises that a primary role of the current SNP devolved administration will be as far as is practicable, under its limited powers, to mitigate the impact of this cost-of-living crisis on all in Scotland who are affected by it.

“Conference therefore calls upon the Scottish Government to engage with all stakeholders, but in particular including the Scottish Trade Union Congress, to examine the feasibility of using all of the existing limited devolved powers to maximise sources of revenue, including the feasibility of a domestic levy on the production of whisky.”

A decision on whether the motion will be included in the final SNP conference agenda will be taken by the party’s Conferences committee, following an internal scoring exercise of each of the motions.

In 2021, Scotch whisky exports were worth £4.5bn, according to the Scotch Whisky Association (SWA), with the industry as a whole providing £5.5bn to the UK economy.

The industry blamed high tariffs on its exports for a “lost decade of growth” in 2020 and said it was struggling to recover from the impact of Covid-19.

However, the SWA welcomed a return to growth earlier this year when it published its export figures for 2021.

The prospect of a whisky tax has been suggested before, including by Professor John Kay who served on the Government’s council of economic advisers under former first minister Alex Salmond.

In 2013, Prof Kay argued a tax should be levied on each bottle of Scottish whisky to give Scotland a better share in the success of the spirit.

It was suggested a tax of £1 on the production of each bottle could boost the budget of Holyrood by at least £1bn.

Economist John McLaren also argued such a tax would be a necessary requirement for an independent Scotland in response to the Growth Commission, completed by Andrew Wilson at the request of Nicola Sturgeon in 2018.

Prof McLaren said such a move would be attractive due to the inability of whisky producers to move production elsewhere.

Blair Bowman, an expert whisky consultant and broker, said additional tax on Scottish whisky would be “massively unfair”.

The author of the Pocket Guide to Whisky said: "Whisky is already horrendously taxed here, paying huge amounts of duty on what is one of our most famous, world-class products.

"To penalise it seems counter-intuitive to me, especially during such a growth period for the whisky industry.

"It just seems very bizarre really to tax an already heavily heavily taxed industry. To tax them again on top of all the other taxes they are already paying, just doesn't make any sense to me.”

The SWA declined to comment.

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