Chamber News
Consumers tell Chancellor to rule out historic alcohol duty increase
7 November 2022 • Sarah Medcraf
Protect our pubs, public tell Hunt ahead of record-breaking alcohol tax rise
- Nearly half of adults would spend less in pubs and restaurants if the government increased tax on alcohol
- 86 percent believe government should protect hospitality businesses when considering changes in tax
- Consumers facing double-digit alcohol duty increase – the highest since 1643
4 November 2022. Almost half of the public (48 percent) would spend less in pubs and restaurants if the government were to increase tax on alcohol, according to a new poll conducted days before the Chancellor delivers his autumn statement.
The poll, conducted by Survation on behalf of the Scotch Whisky Association, found that a third of people (35 percent) would also be less likely to visits pubs, bars and restaurants were tax on alcohol to increase, while two-thirds (68 percent) believe tax on alcohol should either be cut or remain at its current level. Four in five (86 percent) believe the government should be protecting businesses in the hospitality sector when making changes to taxation.
The Scotch Whisky Association has called on Chancellor Jeremy Hunt to freeze excise duty on all forms of alcohol on 17 November and to rule out any automatic increase by the rate of inflation. The Association has warned pubs, restaurants and distillers otherwise face a double-digit tax hike, the highest since excise duty was introduced in 1643, at a time of falling consumer confidence and reduced disposable income.
UK excise duty is currently the highest of any country in the G7. An inflationary increase would mean nearly 80 percent of the cost of a bottle of Scotch is claimed in tax. Scotch Whisky and other spirits generate more than a third of all alcohol sales in pubs and restaurants.
The Treasury has previously noted the importance of spirits to hospitality revenues when announcing a review of excise duty, stating that ‘these days a consumer might wish to have a cocktail spritz in the pub beer garden as much as a cask ale, or a gin and tonic with the evening meal instead of a glass of wine.’ The review was launched during Rishi Sunak’s tenure as Chancellor of the Exchequer.
Sarah Medcraf, CE of Moray Chamber of Commerce said:
“The hospitality sector is already on its knees with venues up and down the country having to make the decision to close. With increase pressures across the business from staff, interest rates rising, food price hikes to name a few, businesses have already had to increase their prices to survive. This linked with the lower consumer spending habits make for impossible trading conditions. Adding the rise in duty on to this is squeezing an industry with nothing left to give.
In Moray Speyside we are fortunate to have so many great distillers, but the proposed duty rise will cost our region £80 million per year. This will impact their ability to invest and sustain in both their infrastructure and their green agenda and will cause a risk to jobs.
The chancellor has the opportunity to freeze the alcohol excise duty and in turn would receive funds through other channels that would be created. Whilst we all appreciate that difficult decisions need to be made to help balance the country’s books, increasing the duty is not the answer”
Mark Kent, Chief Executive of the Scotch Whisky Association said:
“Pubs, bars and restaurants have been devastated by two years of Covid and are facing huge pressures because of rising costs and the squeeze on household incomes. We’re urging the Chancellor to help these businesses by freezing alcohol excise duty and ruling out any automatic increase by inflation, which would represent the biggest increase in the tax since 1643.
“Freezing duty has always proven beneficial for the Treasury. Businesses like Scotch Whisky distillers have invested, innovated and generated more for the public finances than if the government increased what is already the highest rate in the G7 countries. Mr Hunt can generate more from a freeze and meet the public’s expectation that the government uses tax policy to help vulnerable businesses like pubs.”
A spokesperson for the UK Spirits Alliance said:
“Pubs and restaurants are already warning they face closure because of rising costs. They can ill-afford an inflationary increase in duty, which will also hurt distilleries. The spirits industry has always responded to stability through investment that has generated more revenue that the Treasury would get from increasing what is already one of the highest excise levels in the world.
“We would urge the Chancellor to freeze duty across all forms of alcohol, protecting what are often small or micro-businesses, in addition consumers, irrespective of what they choose to consume responsibly.”