Prime Minister Sir Keir Starmer has been accused of breaking his promise to “back Scotch producers to the hilt”, after the Chancellor announced another increase to alcohol duty.
Delivering her first Budget on Wednesday, Rachel Reeves said tax on non-draught alcoholic drinks will increase by the higher RPI rate of inflation.
Despite the rise, it was announced that duty on draught products will be cut by 1.7%, something whisky and other spirits are excluded from.
The Scotch Whisky Association (SWA) said the tax will be a “hammer blow” to the industry.
It had called for the Chancellor to reverse the 10.1% duty increase announced last August by the Conservative government.
Today's @hmtreasury Budget increased duty on #ScotchWhisky, increased the tax discrimination on Scotland's national drink, and broke the Prime Minister’s commitment to ‘back Scotch producers to the hilt.’
Our full reaction from @MarkAGKent ➡️ https://t.co/IjfgeMVEJ9 pic.twitter.com/HyWYjxwegw
— Scotch Whisky Association (@ScotchWhiskySWA) October 30, 2024
“Instead, the damage done to the industry and to Government revenue has been compounded by further increasing the tax burden on the sector, which is already the highest in the G7,” it said.
The industry body said the previous increase resulted in whisky revenue falling by hundreds of millions of pounds, which ultimately led to a lower intake by HMRC.
Mark Kent, chief executive of the SWA, said: “This duty increase on Scotch whisky is a hammer blow, runs counter to the Prime Minister’s commitment to ‘back Scotch producers to the hilt’, and increases the tax discrimination of Scotland’s national drink.
“On the back of the 10.1% duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose.
“It will damage the Scotch whisky industry, the Scottish economy, and undermines Labour’s commitment to promote ‘Brand Scotland’.”
Mr Kent hit out at the different rates of tax between drought and non-drought alcohol which increased in Ms Reeves’s Budget.
He said: “She has also increased the tax discrimination of spirits in the Treasury’s warped duty system, and with 70% of UK spirits produced in Scotland, that will do further damage to a key Scottish sector.
“The disastrous 10.1% duty hike last year has now been compounded.
“This further tax rise means the lessons have not been learned, and the Chancellor has chosen continuity with her predecessor, not change.
“We urge all MPs who support Scotch whisky to vote against this duty hike and tax discrimination of Scotland’s national drink.”
Scottish Secretary Ian Murray defended the alcohol duty rise, telling journalists: “We have to balance the books in terms of public spending and indeed settling and stabilising the economy.”
While he accepted the rise had “obviously not been welcomed by the whisky industry”, Mr Murray insisted: “The inflationary increase is the right thing to do in these particular circumstances.”
He added that there was an additional £750,000 for the Scotland Office budget to “promote Brand Scotland” adding that the Scotch whisky industry will “be a key part of that”.
