Wednesday, 18 March 2015

That was then, this is now.

BBC, December 2013:

The Scotch Whisky Association (SWA) has urged the UK government to abolish the automatic annual increase in duty on wines and spirits.

The industry body is fronting a campaign to encourage consumers to raise the issue with their MPs. It said the alcohol duty escalator was damaging the domestic market and punishing consumers when household budgets are tight.

The Treasury said 90% of Scotch whisky was exported and unaffected by UK duty.

Quite correct.

Although UK alcohol duty (and especially spirits duty) is far too high (with VAT on top, of course), it only affects domestic demand as it is not levied on exports; output is fairly fixed in the short term, so all things being equal, higher domestic duty is 'good' for exports. The same logic applies as it does to domestic duty on imports, which is 'bad' for imports.

That economics Wunderkind Osborne has now finally decided to firmly grasp the wrong end of the stick and came up with shit like this in his Budget speech today:

Mr Deputy Speaker, we want to help families with simpler taxes – and with lower taxes too...

And to back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well.

Quite clearly, all things being equal, this will reduce exports of whisky.


Random said...
Another gem.

Bayard said...

"Quite clearly, all things being equal, this will reduce exports of whisky."

It seems unlikely that it will have any effect. The distilleries will just open the taps a bit wider to make up for increased domestic demand. I doubt that many, if any, distilleries are already going flat out.

George is not such a fuckwit as to admit whom he is really helping with this tax cut: the supermarkets, who will gratefully soak up the duty cut and leave their prices unchanged.

Mark Wadsworth said...

R, yes, that was of course the expected supreme Home-Owner-Ist fuckwittery, but plenty of others have done that one.

B, it might have little effect, but it would have *some* effect. And given that the snobbier ones have 12 year lead times, in the short term they cannot increase supply. It's not like vodka that you can bang out in a couple of weeks.

But yes, I am sure the supermarkets are delighted.