Exeter Gin Faces Financial Pressure
With the Budget just around the corner, concern is mounting within the spirits industry. Mick Skerratt, the owner of Exeter Gin, has voiced grave concerns regarding the possibility of increased excise duty on spirits, which could further endanger small producers already facing escalating operational costs.
Recent Tax Increases
In August 2023, the previous Conservative government raised the excise duty on spirits by more than 10%. Following that, the current Labour government increased it by another 3.65% in 2024. Skerratt argues that with many other production costs also rising, another tax increase would be a significant blow to their business.
“It would put a massive pressure on us as a business and also to our customers,” Skerratt stated, highlighting the unsustainable nature of continually rising prices amid a cost of living crisis.
Export Dynamics and Tax Policy
Despite the dire warning from Skerratt, HM Treasury claims that the majority of UK spirits are exported and thus not subject to UK alcohol duty. This has led to some debate regarding the fairness of the current taxation policy, as many distillers argue they are being treated as a cash cow in the government's financial strategy.
Support from the All-Party Parliamentary Group on UK Spirits
The All-Party Parliamentary Group (APPG) on UK Spirits, which aims to support the industry, asserts that the number of distilleries in the UK has tripled over the last seven years, creating what they call a “modern British success story.” However, they argue that the spiraling excise duties are detrimental to this growth.
The APPG has urged for a complete freeze on excise duty in the upcoming Budget. Carolyn Harris, chairwoman of the APPG, expressed that failing to freeze the duty puts the future of distillers at risk, potentially leading to job losses and economic downturns.
“By not freezing duty, we're putting all distillers in a position whereby they're going to have their business threatened or they're going to create unemployment,” she warned.
Discrepancies in Alcohol Taxation
Interestingly, the APPG pointed out that beer duty has been frozen or reduced at every Budget for the past twelve years, raising questions about the equity of the taxation framework that seems to favor one sector over another.
Alan Collyer, owner of Exeter Brewery, echoed similar sentiments, suggesting the ongoing changes have a negligible effect on the overall challenges small businesses face, especially in light of cheaper supermarket alcohol.
“These pennies here and there really don't make a significant enough difference to drive people back to pubs,” Collyer said.
Government Position
A spokesperson for HM Treasury defended their approach, stating that distilleries are vital to Britain's economy. They outlined initiatives aimed at supporting the sector, including lower licensing fees and reduced tariffs.
Looking Ahead
As the Budget unfolds, the looming question remains: will the government adjust its strategy to better support the spirits industry, or will small producers like Skerratt continue to struggle under the weight of relentless tax increases? The future of many distilleries hangs in the balance, prompting a necessary discourse on fairness, economic support, and sustainable business practices.
Conclusion
The spirits and alcohol industry is at a critical juncture. As consumers tighten their belts amidst a challenging economic landscape, the implications of tax hikes on small producers could be far-reaching—affecting both the business landscape and consumer choices in profound ways.
Source reference: https://www.bbc.com/news/articles/cn817gl7q90o
