Osborne’s Budget delivered on Wednesday (March 19) contained plans to ditch the alcohol duty escalator, a year earlier than planned, and freeze the duty on spirits.
The Scotch Whisky Association (SWA) said the chancellor had listened to businesses and consumers. His decision to scrap the escalator will end the mechanism that had increased the duty on Scotch whisky by 2% above the rate of retail price index since 2008. Also the planned increases of 4.8% in excise duty – which would have added 40p in tax to a bottle of whisky – will not now go ahead.
A consumer poll last week revealed the vast majority of UK consumers, nearly 70%, believed pre-planned tax increases under the escalator on a bottle of Scotch were too high.
‘Supports hard-pressed consumers’
David Frost, SWA chief executive, said: “We are delighted that the chancellor and the chief secretary to the Treasury listened to our case for scrapping the unfair alcohol duty escalator and freezing whisky duty. It is a move that supports hard-pressed consumers, a major manufacturing and export industry and the wider hospitality sector.”
The move will boost a major Scottish and British industry, which supports 35,000 jobs, many in economically fragile areas in addition to the wider hospitality industry, he added.
Ditching the escalator is expected to stimulate investment across the sector, according to independent research by Ernst & Young.
Frost said: “This fairer tax treatment in the UK, the third biggest market for Scotch Whisky, also sends the right signal on excise policy to the governments of the 200 countries to which we export. So, its effects will be felt around the world.”
The British Beer and Pub Association (BBPA) said the budget concessions were “fantastic news”.
Brigid Simmonds, BBPA chief executive, said: “George Osborne is again the toast of Britain’s brewers, pubs and pubgoers. It will protect over 7,000 jobs over two years, mostly jobs of younger people in Britain’s pubs.
“It also shows that the government has understood our case, that taxes on British beer had become far too high, and action was long overdue.”
Meanwhile, Conservative Party chairman Grant Shapps drew widespread criticism for a message referring to beer tax on the social network site Twitter. Many people accused him of condescension after reading his post: “#budget2014 cuts bingo & beer tax hardworking people do more of the things they enjoy. RT to spread the word.”
More budget news is available here.