Select Committee on Scottish Affairs Minutes of Evidence

Supplementary memorandum from the Gin and Vodka Association of Great Britain

  In anticipation of our appearing before you to give evidence, I have pleasure in forwarding our Budget Submission that has been sent to the Chancellor. This highlights five points.

Move to Scotland

  Following consolidation in our industry, 75 per cent of UK produced gin and vodka now comes off the bottling line in Scotland. This has a major impact on the economy.


  The Association, which represents the largest sector of the UK spirits market, has expressed its appreciation already to the Chancellor for the present standstill in Excise on spirits. This was a welcome step in the reduction of the discrimination against spirits. We are seeking continuation of this process.

Competitiveness Price Pressures and Increased Costs

  Our sector is a successful part of an industry that has done much to help itself, but the justifications that warranted last year's freeze remain applicable today and are illustrated in this Submission. We are seeking the Chancellor's assistance to meet the cumulative burden of tax, regulation, competitive pressures, extra costs and tight margins. This is impacting on our industry, notably on our small and medium sized companies. Of note is the impact of oil prices, the net cost of the Climate Change levy and the loss of Export Refunds. Contracts are now going to overseas producers. In consequence, our industry's requirement for Scottish raw materials may reduce.

Increase in Tax per Bottle.

  The amount of Tax per bottle has increased in the last two years in the spirits market. This is particularly true in "Cheapest on Display" in supermarkets where much of the growth has occurred but where our small members' margins are tightest. The tax in this part of the market has now increased in each of the last three years to reach over 86 per cent per bottle. This is explained in the attached submission[6].

The GVA's Submission

  The rate of excise is close to the point of revenue maximisation. It is still discriminatory against spirits. Given the pressures that our sector is facing when tax per bottle has increased, we are seeking a reduction in excise tax in the order of 4 per cent.

  We welcome the opportunity to discuss these points with you and your committee.

The Gin and Vodka Association

January 2001

6   "Budget Submission, December 2000" is available from the Gin and Vodka Association of Great Britain. Back

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