Seeing the Laffer Curve dimly through the bottom of a whisky glass
The great whisky con - Scotsman.com News
THE Chancellor was at the centre of a Budget storm last night, as it emerged that his plan for a huge rise in whisky duty may not raise a single penny for the Treasury.
Despite adding 59p to a bottle of Scotch, Alistair Darling's own figures reveal falling sales will cancel out any gain.
Furious whisky producers viewed the rise for no gain with "utter dismay". Gavin Hewitt, the chief executive of the Scotch Whisky Association (SWA), said: "Scottish distillers are astonished by the Chancellor's announcement. The government's own figures show that any duty increase on whisky is likely to reduce revenue at a time when public finances are tight."
Treasury figures show the package of levies Mr Darling slapped on alcohol will raise an extra £400 million in the year from April. Some £300 million will come from the 14p on a bottle of wine, while £100 million will be generated by 4p on a pint of beer and 3p on a litre bottle of cider. But the tax take from spirits, including whisky, will remain unchanged at £2.3 billion.
Treasury officials insisted the projections were estimates and that revenues would flow from all drinks duties announced yesterday, allowing the Chancellor to fulfil his pledge to tackle child poverty.
As the IFS said:
A cut in duty on spirits would lead to an increase in revenue from spirits. Beer is a complement to spirits, so a cut in spirits duty would lead to an increase in beer sales and an increase in beer revenue. But, since wine is a substitute for spirits, a cut in spirits duty would lead to a fall in sales of wine and this means a fall in revenue from wine. Overall, we find that we cannot reject that the duty rate on spirits is at the revenue-maximising rate. This means
that there is little scope for the Chancellor to increase indirect tax revenue by raising or cutting duty on spirits, since at the current tax rate he is already getting the maximum amount of revenue.
Laffer Curve anyone? But no the Treasury are pretending it doesn't exist, it's for the kiddies! It's all to eradicate Child Poverty! How could you be so mean to think otherwise? And it isn't just whisky that he has pushed over the curve, the whole entrepreneurial culture of the country is now dampened by the realisation that whadaya get? Another day older and deeper in debt.