Conservatives “have to decide which side they are on” – Carmichael plans amendment to challenge whisky tax hike

Taxation currently covers more than 70 per cent of the value of a bottle of scotch, gin or vodka, the highest rate in any G7 country, but under Treasury plans spirits duty will rise by 10.1% this summer. The tax burden on the averaged priced bottle of Scotch Whisky will rise from 70% to 75%, in what the Scotch Whisky Association labelled a “historic blow”.

Scotch distillers directly employ some 11,000 people and help support a further 7,000 jobs, including from the Highland Park and Scapa distilleries in Orkney, in addition to many gin and other distillers across the isles and in Scotland.

Speaking in the House on the Finance Bill yesterday [Wednesday], Mr Carmichael said:

“The Minister will be aware that there was dismay in the Scotch whisky industry at the decision not to reverse the double-digit duty hike previously announced, while introducing a freeze on duty for what the Chancellor called “warm ale”. How is that consistent with the Government’s previously stated policy of reforming spirit duty to support the Scotch whisky industry?

“We know that the Secretary of State for Scotland argued against the increase in duty. One wonders what it was that the Minister found so unattractive in that argument; perhaps we will now get some of the answer. I do not know whether the Minister regards it as a detail, but when will we see spirit duty reform? Can she give us a date?”

Responding, the Financial Secretary to the Treasury Victoria Atkins MP said:

“I understand his concerns. In the last 10 fiscal events before this one, the whisky industry benefited from either freezes or cuts in duties. The Bill will bring into place the new framework announced some time ago, including the health aspect of being able to differentiate the strength of alcohol used in products.

“I am bound by collective responsibility, so I can neither confirm nor deny what the Secretary of State for Scotland may or may not have said. I do not know, but I certainly intend to continue to support the Scotch whisky industry. The changes will be coming in in August. We want to work constructively with industry on this.”

Reacting after the exchange Mr Carmichael said:

“The last thing our flagship whisky industry needs now is another tax rise on top of inflation and cost-of-living concerns – and the total lack of support from the government. The Secretary of State for Scotland seems to have forgotten his remit.

“The claim that this is motivated by health concerns is hard to credit. If that were the case then ministers would have introduced a flat, fair “per unit” tax rate for all alcohol products. Instead the same amount of alcohol attracts a far lower rate for beer and wine than for whisky.

“When I was in government we delivered not just a freeze but a cut in spirits duty. It was a massive boost for the industry and it increased the money coming in to Treasury.

“That is why I am preparing an amendment to the Finance Bill to cancel the rise and give a fair tax settlement to our distillers. When it comes to the vote, the Secretary of State for Scotland and his Conservative colleagues will have to decide which side they are on.”