Alcohol reform could herald spirited future for Global Britain
Spirits tax in the UK is over 70% higher than the tax paid by consumers in the EU, writes Douglas Ross MP. | PA Images
Alcohol reform should focus on the tax burden on UK spirits and the competitive disadvantage the industry faces in the budget next week.
The French have champagne. The Italians have prosecco. The Germans have beer.
Over centuries, nations around the world have carved out niches in the competitive international drinks market and have crafted products for which they are now synonymous.
The UK is no different, but our niche – where we are truly world-class – is in spirits. Scotch Whisky has long been the jewel in the UK’s crown – our number one food and drink export and enjoyed in over 180 countries around the world.
As the MP with the largest number of distilleries in Scotland, you might expect me to say that – but gin is also in the middle of a renaissance, with the number of UK distilleries growing by 270% over the past five years.
Where we differ is how we tax our local products with a global reputation. In the major wine producing nations of the EU, there is no tax on wine at all. While no one is suggesting that level of domestic support for the UK spirits sector – which remains an important source of revenue for HM Treasury – distillers who support the jobs of tens of thousands up and down the country are right to ask why spirits tax in the UK is over 70% higher than the tax paid by consumers in the EU.
Our alcohol tax system has not kept pace with change
Tonight, I will lead a debate in Parliament on the UK’s alcohol duty system. The UK government, after campaigning from the Scottish Conservatives, is already conducting a review to address the imbalance in the current system – which sees Scotch Whisky taxed more per unit of alcohol than wine, beer and cider.
That review - which wouldn’t have been possible while still in the EU - is the way to ensure our iconic industries, like Scotch Whisky, are internationally competitive. It can also embed the fairness in the system that distillers deserve.
The government admits that the current system is irrational – penalising consumers and working contrary to Chief Medical Officer guidance on responsible drinking. The guidelines do not discriminate between categories of alcohol, but currently the tax system does. As a result, consumers who choose to drink 14 units of cider a week, as per guidelines, are taxed £1.13, those who choose to drink 14 units of wine are taxed £3.36, while those who choose Scotch Whisky are taxed £4.06.
That makes no sense, and is further evidence that our alcohol tax system has not kept pace with change.
Tax on spirits, like Scotch Whisky, is the highest among G7 countries. 39% of Scotch Whisky exports are shipped to the other six members of the G7 – but UK consumers pay more in tax on Scotch Whisky than consumers in all of those nations. What a sign it would be of Global Britain, emerging from the rigid structures of EU alcohol taxation, that the tax burden on the sector was being reviewed and reformed ahead of the G7 meeting hosted in the UK later this year.
That reform journey can start by focussing on the tax burden on UK spirits and the competitive disadvantage the industry faces in the budget next week. Scottish Conservatives have again been campaigning with the industry on this and positive news will be a clear sign that the UK backs our iconic industries and heralding a spirited future for Global Britain.
Douglas Ross is the Conservative MP for Moray and leader of the Scottish Conservatives.