Scotland’s world-renowned whisky industry is pressing the UK government over its tax policies, arguing that increased alcohol duty has led to a significant drop in tax revenue. MP Graham Leadbitter has secured a Westminster debate to challenge the policy and urge the government to reconsider its approach.
The Scotch whisky industry plays a critical role in the UK economy, contributing billions in exports and employment. However, industry leaders and politicians warn that recent tax hikes have had unintended financial consequences, with government revenue from whisky duty falling by £300 million, according to the Scotch Whisky Association (SWA).
Whisky duty hike linked to revenue loss
The impact of the UK government’s taxation policies on the Scotch whisky industry has come under scrutiny after data revealed a sharp decline in tax revenues. In 2023, the Conservative government raised whisky duty, a move that was expected to boost Treasury income. However, according to the SWA, tax revenue generated by the industry instead fell by £300 million.
MP Graham Leadbitter, who represents Moray West, Nairn and Strathspey—home to many Speyside distilleries—has criticised the decision. He argues that increasing duty on whisky has placed an unfair burden on producers while failing to deliver the expected fiscal benefits.
“The sensible option, both for supporting Scotch whisky and Treasury receipts, would have been to cut whisky duty. Instead, the Labour government has raised it again,” Leadbitter said, urging Westminster to reconsider its stance. The industry also faces rising production costs, adding further strain on businesses, particularly smaller distilleries.
Trade tensions threaten whisky exports
Beyond domestic taxation, the Scotch whisky industry is increasingly concerned about potential trade tariffs, particularly in the United States. In 2019, under the administration of Donald Trump, a 25% tariff was imposed on Scotch whisky, leading to a stark decline in exports to the US, according to the SWA. With Trump now a leading contender in the 2024 presidential race, industry leaders fear a repeat of these tariffs.
Diageo, one of the world’s largest drinks companies, recently warned that new US tariffs could cost them £161 million in lost profits across their North American brands. Other distillers, including Whyte & Mackay and Ballindalloch Distillery, have also voiced concerns about the potential financial impact.
Leadbitter has urged the government to engage with industry leaders and international partners to protect Scotch whisky exports. “So far, Westminster has shown itself to be no friend of the whisky industry, but it can, and should, turn that around, ” he said.
A UK government spokesperson defended its approach, stating that measures were being taken to support businesses, including reductions in geographical verification fees to lower costs for producers. However, industry representatives remain sceptical, arguing that broader policy changes are needed to secure the future of Scotch whisky.
