Drinks industry calls for duty cuts as Brexit looms

By Rachel Arthur contact

- Last updated on GMT

Pic:iStock/xfotostudio
Pic:iStock/xfotostudio
UK spirit, wine and beer industries are calling for a cut in duty, saying that as Brexit looms they need the government’s support more than ever.

With the uncertainty created by the UK’s decision to leave the EU, industry associations say they need assurances that the government will do what it can to bolster their booming sectors.     

The UK Government will announce its Budget 2017 on March 8.

‘Stand up for Scotch’

The Scotch Whisky Association (SWA) is calling for a 2% spirits excise duty cut to boost the industry, which creates £5bn ($6.3bn) annually for the economy.  

In conjunction with the Scottish celebration, Burns Night, it has today published research that says the industry supports more than 40,000 jobs, many of these in fragile rural areas, and is the largest net contributor to the UK’s balance of trade in goods.

Previous years have seen a freeze or cut in excise. The SWA says that the Government's support has led to a boost in revenue for the Treasury and supported a wave of new distillery openings.

Scotch whisky distillery boom

14 new distilleries have opened in the past 3 years

Some 40 new distilleries are planned across Scotland, with 7 planned to open in 2017 alone 

But it says that the tax remains too high (at 77% of the price of an average bottle of Scotch) and the Scotch whisky industry needs fairer treatment.

Julie Hesketh-Laird, acting chief executive, SWA, said, "Scotch Whisky is one of the UK's most strategically important industries. Without valuable Scotch exports of around £4bn ($5bn) a year, the UK's trade deficit in goods would be 3% larger.

"But we are calling on the government to 'Stand up for Scotch' by addressing the high and unfair level of taxation distillers face in their home market. The current tax of 77% on an average priced bottle of Scotch is a burden on consumers and the industry.

“The Government's own figures indicate that fairer tax treatment leads to increased revenue for the public purse. We are calling on the UK Government to cut excise by 2% in next month's Budget, supporting a great Scottish and British industry at a time of uncertainty, giving us a stronger domestic platform from which to invest and grow to make a success of Brexit."

‘Wine trade hit with Brexit cost of £594m’

The Wine and Spirits Trade Association (WSTA) supports a 2% cut in duty for both spirits and wine.

It says that such a cut would boost the wine and spirits industry by £2.9bn ($3.65bn), and Treasury revenues by £368m ($463m).

After a freeze in wine duty in Budget 2015, it says that wine duty income increased 3.6% to £136m ($171m) the following year.

Miles Beale, chief executive of the WSTA, said: At a time when inflation is rising, and with the added costs and uncertainty that Brexit brings, there has never been a better time for the Chancellor to act positively by addressing the wine and spirit industry’s historically high duty levels and harnessing its potential.”

Wine

“UK wine businesses are reeling from the triple impact of historically high duty rates, higher inflation and the devaluation of the pound”​ - WSTA 

The WSTA says that UK wine businesses are reeling from the triple impact of historically high duty rates, higher inflation and the devaluation of the pound.

“This will hit the wine industry with at least £594m ($748m) in further costs as the UK currency continues to slide against key markets such as the US dollar, the Euro and Australia dollar.”

It says that consumers in the UK already pay 55% of the average bottle of wine on duty and VAT. It points to research where 62% of the public said wine duty was too high and 70% agreed that spirits duty was too high.

UK beer duty: 13x as much as Germany

Beer has benefited from a Government cut in beer tax three times in recent years, with a freeze on duty last year.

However, Britain still pays the second highest rate of beer duty in Europe – and more than 13 times as much as Spain or Germany.

The British Beer and Pub Association (BBPA), Campaign for Real Ale (CAMRA) and The Society of Independent Brewers (SIBA) have launched a ‘cut the beer tax’ campaign.

The beer and pub industry in Britain employs almost 900,000 people, and contributes £23.1bn ($29bn) to the British economy, while paying £12.6bn ($15.9bn) in tax.

Colin Valentine, CAMRA National Chairman, said: “'The three cuts and subsequent freeze to beer duty have supported significant growth in the brewing industry and helped to keep the price of the pint down for pub goers.

“However, with beer tax still at 52p ($0.65) on the pint, beer drinkers are still paying a notable amount - especially in comparison to other big brewing nations. A cut to beer duty will show government support for the British brewing industry and keep the price of beer down for consumers.”

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