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Sunday, February 08, 2009

Scottish Stimulus: Cut Whisky Duty

The political wrangling over President Obama's economic stimulus plan shows just how divisive different thinking about how to get out of the economic doldrums can be. Imagine if someone suggested cutting the federal excise tax on alcohol producers might the best way to fuel economic growth?

One group is suggesting just that in Scotland.

Gen, an independent economic consulting group, has issued a report that shows a 2.5 percent cut in the duty on Scotch whisky would generate more than double the amount of benefit to the United Kingdom's economy as a similar cut made in 2008 to the Value Added Tax.

The Scottish government says the VAT cut added $474 million to the country's economy. Gen says a cut to the whisky duty would pump $1.09 billion in to the Scottish economy.

Gen is staying neutral on whether the government should make cuts in the duty on whisky, but says a tax cut for the industry would provide a greater payback to the economy than many other stimulus plans.

According to the Scotch Whisky Association, the industry employs more than 22,000 and an additional 16,000 in distribution and retail industries. The industry also attracts significant tourism dollars to Scotland. More than 90 percent of Scotch whisky is exported.

It is highly unlikely that Scotch makers will see a reduction in taxes. Instead, the Gen report is expected to be used to try to stop new duties from being imposed.

1 comment:

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