SWA: Increase in British excise duty will cost £2.3 billion in interest payments
According to the Scotch Whisky Association (SWA), the increase in excise duties has cost the British government £2.3 billion ($3 billion) in interest payments.
The previous British government decided to increase excise duty by 10.1% last year. According to SWA, the alcohol tax increase has increased inflation by 0.35 percentage points over the past 12 months, resulting in interest payments of £2.3 billion.
The SWA also said HM Revenue & Custom figures show a government revenue loss from spirits excise duty of £132 million ($173 million) between August 1, 2023, and June 30, 2024, compared to the same period in 2022 and 2023.
The Scotch Whisky Association has called on the new British government to reduce the tax burden on its members.
“We said last August that raising excise duty on Scotch whisky would boost inflation and be bad for the economy,” said SWA CEO Mark Kent.
“The facts are clear one year later: the tax increase imposed by Jeremy Hunt was disastrous. Given the impact on government interest payments and lost tax revenue, the cost was almost £2.5 billion. The increase in excise duties has contributed significantly to the budget gap that the Chancellor of the Exchequer is now trying to plug.”
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By GlobalData
Last year, the UK government announced that alcohol duty would continue to rise in line with RPI inflation from 1 August 2024.
The move sparked an outcry from producers, who called it a “twin-track tax increase” as the government also introduced a transitional system last year that gradually taxed alcohol according to its alcohol content – with lower taxes on low-absorbency alcohol and higher taxes on higher-absorbency alcohol.
In March, the government extended the alcohol tax freeze by six months until early 2025. Then-Chancellor of the Exchequer Jeremy Hunt said a planned three percent increase in alcohol tax would be postponed until February 1, 2025.
