This one has been covered a few times elsewhere so it’s a nice easy start to the “meme-busting” that I hope to make a regular feature on the blog. It’s all about this:
It goes something like this: Scotland produces x amount of goods, including y amount of very valuable whisky. These goods are exported through English ports to the markets beyond. If they leave the UK from an English port, the export duty for these goods is then attributed to England, rather than Scotland. Another subsidy!
The only problem, of course, is that there’s no such thing as export duty.
It doesn’t exist. It is an illusion created by nationalists to manufacture an unwarranted grievance in an effort to dupe voters into saying Yes (or voting SNP).
So quickly, proof that it doesn’t exist.
EDIT 5th October 2016 – after posting this some time ago, endless repetitive arguments and incessant nonsense from people who still wouldn’t believe there is no such thing, I decided to write to HMRC. Their response is included below. Beyond that you can keep reading for further detail if you like.
- You can read the ever-excellent chokkablog post on “Stop Getting GERS Wrong” and look at #4.
- You can read the Freedom of Information response from the Scottish Government when asked what the value of whisky export duty was to Scotland.
- You could even read the EC Directive concerning the general arrangements of excise duty
And just for the avoidance of doubt, while there’s no such thing as export duty, whisky does accrue Excise Duty in the same way as other alcohol and tobacco products. This is a consumption tax and is charged at the point of sale. The Excise Duty for alcohol and tobacco bought here is accrued to Scotland through the Government Expenditure Revenue Scotland (GERS) figures. This is regardless of the origin of the alcohol. So the Excise Duty on Jamaican rum bought in Dundee, English cider bought in Oban and Scotch whisky bought in Auchterarder are all accrued to Scotland’s finances; while Scotch whisky purchased anywhere outside Scotland accrues excise duty for the country in which it is bought.
Here are those excise duty figures recorded against Scotland’s revenue for 2013-14, the latest figures available at time of writing.
You’ll notice that Scotland’s share of UK duties in this area is larger than our population share (8.3%) – 13.2% for tobacco and 9.3% for alcohol. So the additional tax that we generate in these areas are attributed to and then spent by Scottish expenditure.
So where did this myth arise? It appears to have originated from this post on pro-independence site Wings Over Scotland . Titled “The Great Gingerbread Robbery”, it contains a series of myths on VAT, Corporation Tax and, crucially for the purposes of this article, this:
And from that, memes are born. Doesn’t take much to check the facts though and we can definitely file this one under “PISH”.
UPDATE – there have been a couple of comments on Twitter and Reddit since posting this article which are suggesting that I’m mixing up Export Duty and Excise Duty. So, to clear things up, just let me re-iterate. There is no such thing as Export Duty. It does not exist.
There are a number of UK Government website pages which give details on the rules and regulations for imports and exports. Due to the wording of the titles, some of these can be a bit confusing and imply that the UK charges duty on exports. It does not. Some detail:
- Homepage for import and export business taxes
- Duty relief for imports and exports
- Business tax guidance – exporting good outside the EU
The last page of the three links is very clear.
When exporting to “third countries”, i.e. those outside the EU, then you must ensure you pay the necessary duties in the destination country. There is absolutely no mention of paying Export Duty from the UK because it does not exist. And if you think about it, this makes perfect sense as a government would not want to discourage exports and put their own industries at a competitive disadvantage.
The quote above identifies a number of duty relief schemes. In case you think these relate to export duty, you can see them here. All relate to import duties but I thought I’d link them here for ease of transparency.
HMRC maintains an online tool for Tariff Tables, detailing the duty that is incurred by each type of good for import and export. This is the page for Scotch whisky.
“No VAT or Excise measures were found for this commodity on this date”.
I hope that clears it up and my apologies if the wording in the original article was misleading at all.
In a couple of responses to this post on Twitter, I’ve had pro-independence supporters throw this page at me as if it is a justification of their position and provides proof of all that missing tax. So I thought I’d post it here with a brief explanation.
The page is from the Scotch Whisky Association, identifying some facts and figures about the industry. You can take a look at the page yourself but I think that it is these figures which the nationalists are trying to draw my attention to:
So, to avoid confusion, the “UK balance of trade” does not refer to taxation or government revenue. It is simply the calculation of the value of your imports and exports. So whisky exports generate £3.95bn of export trade per annum, i.e. £3.95bn worth of whisky is exported every year. If you want, you can find out some more about “balance of trade”, here. For the purposes of this post, suffice to say that this is not implying £3.95bn worth of taxes or export duty.
Which you can see in the second highlighted section advising that “about £1bn is contributed to the Exchequer in taxes”. This is not referring to export duty. This will be referring to Corporation Tax, VAT, income tax, National Insurance, etc generated by the businesses directly (and perhaps indirectly, it’s not clear) involved in the whisky trade. This will also include Excise Duty, some of which will be attributed to Scotland (for whisky purchased here) and some of which will not (for whisky purchased elsewhere in the UK).
And for the avoidance of doubt, just because it says “contributed to the Exchequer”, which happens to be in London, does not mean that the money disappears to England never to be seen again. With all the taxes that are generated in Scotland assigned to Scotland within the GERS reports, we can see that all taxes raised here are spent here – with a healthy deficit added to accommodate the additional spending; £12.4bn for 2013-14, 8.1% of GDP.
I hope that clears that up.
There have been some ongoing claims around this meme suggesting that whisky exports are attributed to England’s balance of trade- this has nothing to do with revenue but is rather an account of how much a country exports versus how much it imports.
The suggestion, therefore, is that Westminster is, for reasons unknown, adding Scotland’s whisky exports to England in an effort to boost England’s balance of trade.
This is also very wrong.
As you can see from the Office for National Statistics methodology…
…and the Regional Trade Statistics Methodology and this letter from the Office of the Chief Economic Advisor to the Scottish Government…
… the allocation of exports within UK and Scottish government statistics is not based on which port the goods happen to leave from. There are, as you’d expect, complex bureaucratic systems in place to accurately attribute exports to the correct regional area from where they originated.
And in case you don’t believe me, here are the regional export statistics for “beverages and tobacco” from England… £1.5bn for 2015
And the same for Scotland… £4.5bn for 2015.
You can find the source tables for exports here.
So remembering the £3.95bn that the Scotch Whisky Association identified as the whisky industry’s contribution to the UK’s balance of trade… well it can’t be “hidden” in England’s £1.5bn, can it? It all gets attributed to Scotland.
As does all the revenue the whisky association currently generates in Scotland.
So can we please, for the sake of my sanity at least, put this one to bed?
And if you *still* don’t believe me about whisky export duty, click here.