Whisky Focus - Chancellor Scraps Alcohol Escalator Tax & Whisky Duty Frozen

In today's Budget, Chancellor George Osborne showed that he had listened to businesses and consumers by not only scrapping the escalator, which has increased duty on Scotch Whisky by 2% above the rate of RPI every year since 2008, but also by freezing excise duty on whisky.

This means that planned increases of 4.8% in excise duty, which would have added another 40 pence in tax to a bottle of whisky, will not now go ahead.

I am sure single malt whisky drinkers will welcome todays announcement from the Chancellor's who's decision was a show of support for a major Scottish and British industry, which supports 35,000 jobs, many in economically fragile areas. The Chancellor described Scotch Whisky as a great "British success story". The move will also benefit the wider hospitality industry and help support investment across the sector, according to independent research by Ernst & Young.

The Scotch Whisky Association said scrapping the escalator will be welcomed by hard-pressed consumers. The vast majority of UK consumers - almost 70% - said in a poll last week that pre-planned tax increases under the escalator on a bottle of Scotch were too high.

David Frost, Scotch Whisky Association chief executive, said: "This show of support for distillers from the Coalition Government will be warmly welcomed across the Scotch Whisky industry.

"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.

"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 alcohol duty escalator was introduced in 2008 and scheduled to end in 2015. Since its introduction the tax on a bottle of Scotch whisky had increased by 44% or RPI plus 2% each year.
 

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