Cut Whisky Duty To Boost Scottish Economy

[William]

Independent consultants say slashing duty by same amount as VAT cut could raise £733m

NEW FIGURES from leading economic consultants Gen show that a 2.5% cut in duty on Scotch whisky would generate more than twice as much benefit to the UK economy as last year's equivalent VAT cut, the Sunday Herald has learned.

Scottish government figures suggest the VAT cut resulted in a £320 million boost in value to the Scottish economy, leading the first minister, Alex Salmond, to suggest that direct investment in building programmes instead of the tax cut would have raised more than £680m.

But Gen, which has no ties to the whisky industry, claims cutting the duty would generate £733m for the Scottish economy.

Gen director Richard Marsh said: "Although it is not proposed that government should, or could, issue a £1 billion cut in duties to the whisky industry, our research shows they would definitely get greater return for their money by supporting this sector with some cuts.

"Whisky is the industry with the most potential to benefit the Scottish economy. It is our belief that channelling tax cuts directly to the hugely productive and successful Scotch whisky industry would in theory be worth more to Scotland's economy than a major capital investment programme."

The report was seized on by the Scotch Whisky Association (SWA), which lobbies the Westminster government for a more favourable tax regime. The body is expected to launch a new campaign to discourage the chancellor, Alistair Darling, from imposing further duty hikes in his spring Budget.

David Williamson, an SWA spokesman said: "We hadn't seen these figures before, but they confirm what we know about the strong productivity of the sector. You could call it a virtuous circle. Lower taxes make us more competitive at home, and lead to more investment from producers to sell more higher- value products in export markets.

"This in turn contributes more export revenue, and helps the balance of trade. Economists will tell you that supporting indigenous exporting industries helps the wider economy and is the way to help the UK economy out of recession."

Gen's figures are based on "feeding through" the whisky industry into the Scottish government's input-output model. The resulting finding is that, if cuts in duties were passed through the whisky industry, consumption and production would increase, spurring more production and increasing exports.

The Scotch whisky industry generates around £1.5bn in gross value added per year. Gen calculates that the knock-on benefits of the industry add around £2.5bn to the Scottish economy. The industry employs over 22,000 skilled workers, and 16,000 in supply chain and retail industries, as well as 1700 whisky-related tourism and leisure jobs.

In an interview with the Sunday Herald last year, finance secretary John Swinney warned a rise in tax on spirits would "undoubtedly have an effect on the tariffs that other countries deploy".

"We essentially have a punitive taxation regime in relation to whisky, which puts the industry at a competitive disadvantage," he said.

Sales of Scotch whisky have soared on the back of recent demand from areas such as China, India, Russia and parts of South America, and the industry has reacted with multi-million-pound investments in new distilleries such as Diageo's Roseisle in Speyside. Some 90% of Scotch whisky is exported.

William

Source: The Sunday Herald

[Alastair]

Interesting, it certainly sounds like it would be a good idea for the government to cut duty but what do i know of the politics and finance of whisky i just drink the stuff. Seriously Gen appears to be a totally independent body and the government should take a look at what they are saying.

Alastair