The chancellor threw a lifeline to the Scotch whisky industry by pledging to lobby the US government to remove “harmful” tariffs as he froze duty on all alcoholic beverages, including spirits, for a year.
The chancellor said he would lobby the US government to remove a 25 per cent trade tariff on exports of single malt to the US, which was imposed last October in a boost for the Scottish food and drink sector, which he described as “our largest food and drink export”.
“We will continue to lobby the US government to remove this harmful tariff,” Mr Sunak said, adding that the government had set aside £1m to promote Scottish food and drink overseas, while distilleries would also benefit from £10m in research and development funding to help cut their carbon emissions.
The Scotch Whisky Association (SWA), a trade body, welcomed the additional support as well as the continued duty freeze on spirits, but said it had been hoping the chancellor would cut duty on Scotch whisky to help the industry during a “challenging time”.
“The fact remains that duty on spirits in the UK is already very high and puts Scotch whisky at a competitive disadvantage to wine, beer and cider, with £3 in every £4 spent on an average price bottle of Scotch whisky going to the government in tax,” said Karen Betts, chief executive of the SWA.
Nonetheless, the Commons cheered when the chancellor announced there would be no increase to the duty on spirits, beer, cider or wine. “For only the second time in almost 20 years, that’s every single one of our alcohol duties frozen,” Mr Sunak said, adding that, despite increasing numbers of closures, pubs were at the centre of community life.
The chancellor will also increase the business rates discount for pubs from £1,000 to £5,000, applicable for sites with a ratable value below £100,000 in England for one year from April 1.
“The pubs sector will also benefit from a freeze in duty on all types of alcohol, although the challenge is still getting customers through the door in the first place amid increasing pressure on people to stay at home during the coronavirus crisis,” said Russ Mould, investment director at AJ Bell, the investment platform.
“That might explain why shares in Marston’s and Mitchells & Butlers shrugged off the Budget announcement.”
As well as getting rid of VAT on digital publications, which he described as a “reading tax”, the chancellor also ended VAT on menstrual hygiene products.
“I can also confirm, now we’ve left the EU, that I will abolish the tampon tax,” Mr Sunak said. “From January, next year, there will be no VAT whatsoever on women’s sanitary products.”
