Show Notes
Is Scotch Whisky "unfairly" taxed in the UK compared to other drinks?
Yes, says Mark Kent, CEO of the Scotch Whisky Association. "72% of the cost of an average bottle of Scotch goes on tax of one form or another," he says.
And it's sometimes cheaper to buy whisky shipped to other countries than to buy it in Scotland because the UK has the fourth highest level of excise duty on spirits in Europe, and the highest in the G7 group of nations.
"Scotch falls under spirits," he says, "and 70% of all spirits made in the UK are made in Scotland." Consequently excise duty on Scotch per litre of alcohol per unit is three times that on beer or cider. "It's simply unfair on consumers, producers and the supply chain," he concludes.
"Would the French do that with Champagne or with other national drinks?" he asks.
And it’s counter-productive.
”The curves are clear that the more you tax, especially premium products, the less you get back,” he says. “And every time we’ve seen a freeze or a cut, we’ve had a couple of cuts over time, that’s led to more revenue to the Treasury.”
However, it's not all gloom and doom, Mark says, despite "the job losses, the pauses in investment and the day-to-day difficulties of distillers."
"We've got the potential to get back to that long-term curve that we saw before COVID," he says.
The India free trade agreement has brought down the import tariffs into India, the largest whisky market in the world, from 150% to 75%. US tariffs on whisky have been removed. And tariffs in China have been reduced from 10% to 5%.
"But," he warns, "it's not plain sailing by any means. The state of the industry is still very delicate. There's a lot of domestic headwinds."
"As we speak," Mark concludes, "You're seeing job losses, you're seeing pauses in investment, you're seeing day-to-day difficulties of distillers which are then reflected in the wider supply chain. [But] if we get that Government support in the here and now, to support us, to fan the embers of what could be a recovery and a return to long-term growth, then I think the potential will be fulfilled and Scotch will be back."
🎧Tune in as John and Mark discuss:
➡️the fragile state of the Scotch Whisky industry ➡️how the UK tax & excise system makes it cheaper to buy Scotch Whisky in other countries rather than in Scotland ➡️how evidence suggests that when tax on whisky is reduced, the Treasury makes more money ➡️how Scotch is part of the UK's soft power abroad ➡️how global markets are opening up to Scotch Whisky
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