Cut alcohol duty and ‘back Scotch whisky’, business leaders tell Chancellor

Rachel Reeves has been urged to lower the duty placed on spirits after the previous government raised it by 10.1% last year.

In a letter sent to the Treasury, the Chancellor was told that last summer’s tax increase had a “damaging impact” on Scotland’s national drink.

It was signed by business leaders from organisations including the Scottish Chambers of Commerce, the Scottish Tourism Alliance, Scotland Food and Drink, UK Hospitality Scotland and the Institute of Directors and Prosper.

The group said a reduction on alcohol duty for Scottish whisky would “signal that Scotland is a competitive place to invest, would recognise the benefits of the sustainable employment for which the Scotch Whisky industry is renowned and would boost a central part of Labour’s ‘Brand Scotland’ vision”.

Ms Reeves – who has said economic growth is her biggest priority – has warned she faces the task of filling in a £22 billion financial shortfall left over by the previous government.

Prime Minister Sir Keir Starmer has pledged not to increase income tax, national insurance or VAT, leaving her with fewer options to raise cash.

However, the Scotch Whisky Association (SWA) said last year’s duty increase saw less money being raised by the Treasury.

The SWA said in the 12 months after the duty was raised in August 2023 revenue plummeted by £300m.

Business leaders urged Sir Keir to keep his general election campaign pledge of “backing Scotch producers to the hilt”.

Liz Cameron, director and chief executive of the Scottish Chambers of Commerce, said: “Scotch Whisky is one of Scotland’s most iconic industries, but the 10.1% tax rise last year clearly damaged confidence, which in turn impacts investment and the ability to drive growth.

“HM Treasury data also shows that the tax rise reduced revenue to support public services. Whichever way you look at it, the double-digit rise cost the Treasury £300m.

“The new Chancellor has a chance to change direction by supporting this home-grown global success story by reducing the tax burden on Scotch Whisky, supporting communities and supply chain companies across Scotland.”

Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “Scotch Whisky is vital to Scotland’s tourism offer.

“Recent data shows that 40% of all international tourists will visit a Scotch whisky distillery during their stay, and many of members tell us that those who visit their distilleries elect not to buy a bottle due to the high level of duty.

“UK tax on Scotch Whisky is the highest in the G7 and higher than the majority of European countries.

“The tax burden on industry and consumers is too high, and the Budget on 30 October should signal the intention to reduce the rates over the course of this Parliament.

“This will support the Government’s ‘Brand Scotland’ vision, backing the rhetoric with action.”

Mark Kent, SWA chief executive, added: “The industry is grateful to Scotland’s leading business and sectoral organisation for the support.

“Speaking with one voice, they have delivered a clear message to the Chancellor – back Scotch Whisky and, in doing so, back Scotland by reducing the tax burden on 30 October.”

A spokesperson for the UK Government said: “We’re committed to supporting businesses, including Scotch whisky producers, including through capping corporation tax at 25% and publishing a business tax roadmap so that future investments can be planned with confidence.”