Scotch whisky makers accuse Labour of delivering hammer blow to industry after alcohol duty hike
Labour has been accused of delivering hammer blow to the Scotch whisky industry after the Chancellor announced another increase to alcohol duty.
Labour has been accused of delivering hammer blow to the Scotch whisky industry after the Chancellor announced another increase to alcohol duty.
Rachel Reeves used her first budget yesterday to increase the tax on non-draught alcoholic drinks by the higher RPI rate of inflation.
This could see producers pay more than £12 of tax per bottle of Scotch for the first time in history.
The Scotch Whisky Association (SWA) said the move serves no economic purpose and will only damage the Scotch whisky industry and the wider economy.
It had called for the Chancellor to reverse the 10.1% duty increase announced last August, which it claimed had already resulted in whisky revenue falling by hundreds of millions of pounds.
It comes less than a year after Sir Keir Starmer took aim at the Conservatives for failing to provide Scotlands whisky industry with the stability it needs and promised to back Scotch producers to the hilt.
Rachel Reeves pictured during her first budget yesterday which she used to increase the tax on non-draught alcoholic drinks by the higher RPI rate of inflation
The Scotch Whisky Association (SWA) chief executive Mark Kent said the move would be a hammer blow to the industry
The tax hike could see producers pay more than £12 of tax per bottle for the first time in history (Stock image)
SWA chief executive Mark Kent said: This duty increase on Scotch whisky is a hammer blow, runs counter to the Prime Ministers commitment to "back Scotch producers to the hilt", and increases the tax discrimination of Scotlands national drink.
On the back of the 10.1% duty increase last year, which led to a reduction in revenue for HM Treasury, this tax hike serves no economic purpose.
It will damage the Scotch whisky industry, the Scottish economy, and undermines Labours commitment to promote Brand Scotland.
Mr Kent hit out at the different rates of tax between drought and non-drought alcohol which increased in Ms Reevess Budget - as it was announced that duty on draught products will be instead be cut by 1.7%.
He said: She has also increased the tax discrimination of spirits in the Treasurys warped duty system, and with 70% of UK spirits produced in Scotland, that will do further damage to a key Scottish sector.
The disastrous 10.1% duty hike last year has now been compounded.
This further tax rise means the lessons have not been learned, and the Chancellor has chosen continuity with her predecessor, not change.
We urge all MPs who support Scotch whisky to vote against this duty hike and tax discrimination of Scotlands national drink.
The IFS think-tank warned that the £25billion move to increase the headline employer NICs rate and lower the threshold at which it is paid will hit the lowest-paid jobs hardest
The IFS pointed out that the proportional costs of staff would be increased much more for low earners
Scottish Secretary Ian Murray defended the alcohol duty rise, telling journalists: We have to balance the books in terms of public spending and indeed settling and stabilising the economy.
While he accepted the rise had obviously not been welcomed by the whisky industry, Mr Murray insisted: The inflationary increase is the right thing to do in these particular circumstances.
He added that there was an additional £750,000 for the Scotland Office budget to promote Brand Scotland adding that the Scotch whisky industry will be a key part of that.
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Ms Reeves announced a slew of new fiscal policies which businesses say they will have to shoulder the burden of.
In the most Left-wing Budget for decades, Labour pushed taxes to their highest level in history and relaxed government borrowing rules to finance a massive spending spree.
Included in the raft of new proposals was a 6.7 per cent rise in the minimum wage and a rise in employers National Insurance (NIC) contribution.
Ms Reeves, the first woman in history to deliver a Budget, said the once in a parliament event was needed to fix the damage done to public finances by the last government, repair public services such as the NHS and lay the foundations for future growth.
At a briefing this morning, IFS director Paul Johnson said the extraordinary package unveiled yesterday had made the state bigger, predicting it would not shrink again amid a decade of higher taxes.
He swiped that Ms Reeves claim that employer NICs did not hit working people was a pretence.
And there was a warning that despite the huge increases in public spending, the finances still looked shaky.
Businesses have reacted furiously to Labours £25billion tax raid and warned the scale of the tax rises would hit growth and jobs
Chancellor Rachel Reeves said the country had voted for change and vowed to invest as she mounts one of the biggest raids in history in the Commons
Mr Johnson suggested Ms Reeves was being unrealistic by pencilling in much less generous spending in the later part of the forecast - cautioning that Labour ministers would force her to up the level again.
IFS economist Isaac Delestre told the briefing that pushing up the employers allowance would protect the smallest firms, but others would be badly exposed.
What we can say is its going to be small employers that will see the least increase as a result of this measure, he said.
Instead the employers who are going to be paying the most are those who have a large staff.. particularly larger employers who employ a lot of workers on lower wages.
Because as we have seen it is those lower wage workers who are seeing the biggest proportional increase in the cost of employment as a result of the measures introduced yesterday.
Louise Maclean of Signature group pubs said that the budget has pushed her company and many others into the red, which will affect the consumer.
Why is it always us? We all knew that employer NI was going up and that the national minimum wage was going to increase but the drop in the threshold was a bit of a kicker we didnt see coming, she told BBC Radio 4s Today program.
The total impact for our business is a £1.7million increase in staff costs and we dont make that in profit.
Yesterdays budget made us a loss-making enterprise, so we are going to have to make some changes in April to tip us back into profit. We dont want to let people go or close revenues.
We will have to pass it on to the consumer which we dont want to do. This will mean increased prices in every venue across the country from April 1.
When our costs go up so significantly, we will have to pass that on to the consumer and how much more can the consumer take.
Louise Maclean of Signature group pubs said that the budget has pushed her company and many others into the red
The Chancellor hiked employer national insurance contributions by 1.2pc to 15pc from April next year.
And she slashed the earnings threshold – the amount workers must earn before employers pay national insurance – from £9,100 to £5,000.
NICs will not be increased for employees after Ms Reeves vowed not to target working people and instead hit firms in order to raise revenues.
The Chancellor acknowledged that hitting firms with higher taxes was a difficult choice, but businesses said it would batter firms.
But, in a furious backlash at the move, senior industry figures said it would bring growth to a grinding halt, force companies to cut salaries, reduce hiring and hike prices to cope with the additional cost of employment.
