Goodbye Scotland? Hello duty-free whisky?
It’s independence day! Or stay the same day! We won’t know until the early hours of tomorrow morning, and everyone is awaiting the result with baited breath. Not that we are trying to change the minds of any last minute swing voters or anything, but some folks have calculated that whisky, and indeed potentially other forms of alcoholic beverage even if they aren’t made in Scotland, might actually be cheaper if Scotland were to go its own way.
The reason is, of course, that the UK levies massive amounts of excise duty and VAT on alcohol, which can comprise up to 80% of the actual retail price. A free Scotland would be at liberty to set its own rates of duty and even (assuming it wouldn’t be part of the EU. Sore point) make up whatever rate of VAT-equivalent it chooses. Given that Scotch whisky is a Scottish product, canny lawmakers could choose to set lower duty on whisky than other types of drinks which would, presumably, stimulate consumption, and therefore the economy behind it. And if the duty/VAT on other drinks was lower than in the UK, there would be an increase in cross-border demand too.
And that’s what accountant’s Baker Tilly envisage. A frozen North, white with transit vans, as cheeky bootleggers pop over the border on booze cruises to stock up on cheap alcohol. Forget Gretna being a place where you can elope, soon it could be the place you met your perfect match in a single malt.
"The sale of whisky from an independent Scotland to retail customers in the rest of the UK would no longer be a UK domestic supply subject to UK excise duties and VAT," said a Baker Tilly spokesperson, nodding sagely. "Currently, total UK consumption taxes – excise duty and VAT – can be as much as 80pc of the consumer price of a bottle of whisky.
The firm added: "We’ve seen similar cross-border pricing anomalies between the UK and France, resulting in the so-called ‘booze cruises’ to hypermarkets in northern France. A price differential arising from changes in excise duties and the Scottish equivalent of VAT to the consumer price of a bottle of whisky as Scotland leaves the UK and transitions to EU membership could result initially in a new cross-border market with the rest of the UK for duty-free goods.”
So what else could Scotland be a duty-free haven for? Fuel perhaps? UK fuel duty (with added VAT) is also scandalously high, so a lower duty rate would bring down the price of fuel. Although the savings would probably outweigh the costs, unless you live in Carlisle or Berwick upon Tweed.
Of course, the full benefit of a lower duties Scotland would have to be tempered by the exchange rate, given we’re not letting them keep the pound…