CHANCELLOR Philip Hammond has been urged to rule out a tax hike on Scotch whisky when it comes to this year’s budget.
Increasing duty could even “risk or undermine” the industry, an SNP MP has claimed.
Brendan O’Hara, who is chair of the All-Party Parliamentary Group on Scotch Whisky, said it was vital that the industry was protected, and not burdened with a counterproductive and unnecessary tax hike.
But the Treasury claimed keeping taxes frozen would cost the equivalent of “100,000 teachers’ yearly salaries”.
The Scotch Whisky Association disagreed. According to their analysis of Treasury figures, released earlier this month, the freeze on spirits duty announced in last November’s budget, saw revenues increased by £113 million, contrary to UK government forecasts predicting that it would cost £225m.
The Scotch Whisky Association say their modelling shows that the Treasury will likely not derive any “significant return at all from an increase to spirits” if they are to increase taxes.
O’Hara said: “Scotch whisky is one of Scotland’s major assets and a global success story. At a time of continued Brexit uncertainty and instability, we cannot risk or undermine our whisky industry by increasing the tax liability on our producers who are already contribute so much.
“Despite the Treasury predicting lost revenues of £225m from the November duty freeze they actually rose by £113m. By contrast, when the Treasury increased revenues the previous March by 3.9%, revenues dropped by 7.2%. Scotch whisky cannot be forced to bankroll the UK’s failing economic strategy.
“For too long the Treasury has viewed the industry as a ‘cash cow’, as evidenced by last year’s counterproductive duty hike. That approach must come to an end, and I call on the Chancellor to rule out unnecessary tax hikes, and instead take heed of the economic reality, and retain the duty freeze on Scotch whisky to ensure that this vital Scottish industry continues to grow.”
A Treasury spokesman told The National: “We recognise the importance of the Scotch whisky industry to the UK, which along with consumers, local pubs and breweries has benefitted significantly from freezes and cuts to alcohol duties in recent years.
“However, these freezes come at significant cost to the public purse. Successive cuts and freezes to alcohol duty have cost approximately £4 billion since 2013/14, equivalent to 100,000 teachers’ yearly salaries.”
The debate over duty came as it was revealed Hammond is battling with officials over the date of the budget.
Reportedly, Hammond wants to hold it in October rather than have a November budget, as he wants to avoid any fight over the nature of the Brexit deal Theresa May manages to agree with the EU.
There are fears Brexiteers could use votes on the budget to bring down the government.
A source told the Mail on Sunday: “November is going to be bloody, and the last thing [Hammond] wants is to become a proxy for the Chequers rows.”
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