The Chancellor should raise whisky duty, and cut it too

The Chancellor should raise whisky duty, and cut it too

by Jonathan Stanley
article from Monday 13, November, 2017

I LOVED the dodgems as a boy. Driving around in circles, banging into other children and their suffering fathers. Then finally, the cars all stop and everyone returns to glum normality once the cash runs out.

Such must be the mood in Downing Street right now. Everyone has had a merry old week or twenty bumping into each other and soon there will a chance for the Chancellor to shine... Come on, I'm trying guys.

Budget day will see the ritualistic muddled thinking where one unit of alcohol is equal to another and simply there for the Exchequer to tax even more... the devil's share now makes up a very significant fraction of the retail cost.

Yet all is not equal. Cider is taxed lower than beer for no good reason more than it "helps our orchards". Pretty useless given the minimum juice content of cider is a measly 35% and much juice is imported concentrated from the EU. Imagine if France ran its wine industry thus? There is no reason we need to continue this absurdity. It pours billions into the pockets of sugar water merchants in the West Country yet white cider is a significant problem for hazardous drinkers. 

Looking for other examples? Well, the whisky sector is equally absurdly taxed. Not all whisky is equal. A cursory examination shows there are two basic types, potstill and column still whisky. Yes, yes there is malt and grain but on the real technical side the still makes the difference. Massively.

Potstilling (pictured) is a batch process that creates a flavourful spirit, in Scotland this is always pure malt because the law requires it. Ireland does potstill whisky from unmalted grain perfectly well and it is delicious.

Column stilling is more akin to refining oil than refining aqua vitae. It strips alcohol from wash via a continuous reflux operation that gives us a rough, strong vodka that is then cut with water and poured into old bourbon or sherry barrels.

It is what makes Scotch cheap. Blended whisky, grain whisky, are made for a far lower cost than single malts. Try an 8-year-old malt and then a 30-year-old grain whisky. Only one will set the palate alight, the other just burns.

The columns are huge. Cameron Brig, Girvan, North British, are all industrial operations. Why on Earth should they be taxed at the same rate as specialist, world class expressions that employ families in small villages across Scotland?

Gordon Brown did something right while in office. He introduced a lower alcohol rate for microbreweries to encourage variety. There is craft, temperature control, exotic hops and malts that created a raft on new brews. With whisky it's largely the process and storage.

The Chancellor could so much worse than cut the duty paid on single malt or otherwise potstill whisky and retain the standard rate for column still whisky that really is a competitor for vodka and a way of bulking up rarer malts.  The quality of blends would naturally rise, the tax take would rise given the huge volumes of grain yet blends for export and high end domestic consumption would remain competitive.

France did this with wine decades ago, and so much vin ordinaire and table wine was ploughed up yet the finest Bordeaux and Burgundy still command great prices. The reputation was enhanced, not harmed, by moving away from giving cheaper grot a level playing field.

Let's play it smart here, or else devolve the way whisky is taxed so that tax take remains the same yet a higher end industry results.

Slainte!

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