Britons pay 25% of all EU Spirits Tax

07 Feb 2017

Tax on spirits in the UK far above the EU average
Scotch Whisky Association calls for 2% cut to support flagship domestic industry

BRITONS pay over one quarter of all the tax on spirits collected in Europe, largely because of a domestic tax level far higher than the European average.

The United Kingdom pays 26% of spirts duty collected in the European Union despite having only around 11% of its population. The Scotch Whisky Association (SWA) is calling on the UK government to lessen the duty burden facing consumers and producers.

On a 70cl bottle of Scotch people in the UK pay £7.74 in excise duty alone*, compared to an EU average of £4.40**.

These figures reveal high levels of tax even before a dram of Scotch is taxed again as VAT is added to the retail price of whisky. In the UK, VAT is currently 20%.

In total, the price of an average bottle of Scotch Whisky in the UK is made up of 77% in tax. Only three countries in the EU tax spirits at a higher rate:  Sweden, Finland and Ireland.

Explained another way, the price of a single, 25ml dram of Scotch Whisky includes around 28 pence of excise duty - more than one penny per millilitre. The EU average is 16 pence.

The SWA has called for a 2% reduction in excise duty for whisky - less than a penny per dram - in the Budget on March 8 to support consumers and the industry and boost revenue to the UK government.

The Association argues that, as a hugely important domestic industry that contributes £5 billion to the UK's economy each year and supports 40,000 jobs, more government support is needed to help the Scotch Whisky industry invest and grow as it prepares for the UK's exit from the EU.

The UK government's own figures reveal that an historic duty cut in 2015 actually led to increased revenue flowing to the Treasury - an additional £123 million in the 12 months following the cut compared to the year preceding the change***.

SWA acting chief-executive Julie Hesketh-Laird said: "British people pay more tax on their Scotch than is fair. This is shown very clearly when compared to other European countries.

"The Chancellor is in a strong position. He can reduce tax on Scotch Whisky, help consumers as the threat of inflation grows and take the opportunity to boost one of the UK's flagship industries. At the same time, as past experience has shown, this should lead to increased Government revenue.

"This is a common sense decision that could benefit everyone. I hope he listens to a key British industry, assesses the figures and stands up for Scotch."

End

Notes to editors
With media enquiries and to request interviews, please contact: Rosemary Gallagher, SWA head of communications, 0131 222 9230 or 07432 605 385 or rgallagher@swa.org.uk

*The 77% tax (VAT and excise duty) is based on an average selling price of £12.90 for a 70cl bottle (as at September 2016) of Scotch Whisky in the off-trade in the UK. Of that, excise forms £7.74 and VAT forms £2.19. Therefore total tax on a bottle is £9.93.
** Source: The EU28 average tax rate applied to spirits is €18 per litre of pure alcohol, equivalent to £4.40 per bottle of Scotch Whisky. Exchange rates recorded from European Commission on 04/10/2016.
***Spirits duty receipts have continued to increase year on year, in the twelve months to October 2016, spirits duties totalled £3.2 billion, £99 million (+3.2%) more than a year earlier.

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