The Craft Gin Club is calling drinks industry companies, professionals and associations to join our petition to lobby for lower duties for small, independent distillers in the UK. Between convoluted regulations and significant capital investments required to launch a small distillery, high duties are an additional burden that could strangle a burgeoning industry that demonstrates amazing potential for small business in the UK.
Currently, spirits duty rates are the same regardless of whether the distiller produces 10 litres or 10 million litres per year. Our proposal calls for a progressive duty scheme in which small distillers would pay a substantially lower rate than large, multinational distillers. The savings from these duties would allow entrepreneurial distillers to create jobs and invest in innovation, adding to the small base of UK spirits that are making waves at drinks events in the UK and around the world.
On top of duties, VAT is problematic for small distillers as VAT is added to the retail price of spirits after the excise duty is added to that price, meaning that the government is effectively taxing an already existing tax, obviously a serious burden and impediment for small distillers seeking to grow their businesses, not to mention to cash-strapped consumers that would like to responsibly taste a variety of different spirits.
For comparison in the UK, we look to the brewing industry. Micro-breweries in the UK have blossomed thanks to a law called the Small Brewers Relief Scheme implemented in 2002. A similar progressive duty scale for the distilling industry would not only accelerate the micro-distilling movement, it would also be a fair demonstration of the governments desire to help small businesses.
For inspiration we look to the United States Congress where there is currently a bill in committee drafted with the American Distilling Institute that would reduce taxes for small distillers by 80%, from the $13.50 (£8.83) current Federal duty per proof gallon to $2.70 (£1.77) per proof gallon for small distillers.
A small distiller is defined in this case as producing under 100,000 proof gallons annually. A proof gallon is defined as a 50% alcohol at 60ºF (15.5ºC). At 40% ABV, that would define a small distiller at 125,000 gallons annually, the equivalent of 473,176 litres or 675,966 70cl 40% ABV bottles (112,661 cases). Considering most craft distillers in the UK produce well under 100,000 litres per year, similar legislation made law by the government would significantly encourage aspiring spirits entrepreneurs.
For examples of how much spirits entrepreneurs can contribute to the economy, we can consider that the state of Oregon estimated in 2011 that its 69 distillers at the time made $53m (£35m) in annual sales while some estimates put the potential of the state of Michigan's booming craft distilling industry at $400m (£262m).
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