Raised taxes on fuel and whisky to hit Argyll and rural Scotland

Chancellor Alistair Darling’s budget yesterday included one tax that will hit Argyll and all of rural Scotland and the islands hard.

Raised tax on fuel

He raised Fuel Tax by three pence. Yes, this is spread over a nine month period, with a 1p rise on 1st April, another 1p rise on 1st October and the final 1p coming in on 1st January 2011. Despite this tax-creep, the measure amounts to discrimination against those who live in remote rural communities where public transport services are slender and sometimes less than that; and where pump prices are already higher, with the transport costs of oil distributors shifted to the consumer.

In Argyll, as in most of rural Scotland, there is no alternative to using a car.

Argyll’s MP, Alan Reid, has been strongly critical of this – and other – aspects of the budget. Mr Reid points out: ‘This increase in fuel duty, on top of the recent steep rise in the price of fuel, is a severe blow to drivers in rural areas where there is no alternative to the car. The Chancellor’s decision to phase the increase in over nine months is of little help.

‘Instead of crudely putting up fuel duty across the whole country, the Government should follow the example of other European countries and levy a reduced rate of fuel duty in remote rural areas where there is no alternative to the car’.

Highlands and Islands MSP, Dave Thompson is equally enraged. He says: ‘Every rise in fuel duty affects not only families and commuters, but also hauliers who transport goods to our shops.

‘This means that shops will have their costs increased which will in turn increase the prices paid by consumers.  This is just another unfair tax levied by the UK Government.

‘During the current economic situation, we need policies in a budget that support families and businesses, not policies that are unfair and punish them’.

Jim Mather, Argyll’s MSP, is, as Enterprise Minister, concerned with these issues in terms both of their impact on Argyll folk and on businesses in Argyll and across Scotland.

He says that he is disappointed but not surprised that Chancellor Darling has chosen to ignore pleas for a fuel tax regulator for Highlands and Islands motorists and has instead determined to drive fuel tax up a further 3p over the next twelve months. ‘There was a faint hope held by some that the Chancellor had been listening to the large body of opinion to the effect that ever escalating fuel prices are a serious threat to the economic life of rural and island Scotland.

‘Alisdair Darling has Lewis connections but that link does not appear to have persuaded him that the steep rise in the price of fuel  – a rise in which his department takes a massive share – affects every aspect of rural life. While the increase in fuel duty is being phased in the effect is that the full increase will be in place before long.

SNP and Plaid Cymru MSPs have tabled an Early Day Motion deploring the anticipated budget action. It reads:

‘That this House notes the recent unexpected spike in the price of petrol at the pump, recognises that unexpected increases in the price of fuel impacts significantly upon hard-working families, businesses of all sizes, seriously affects those living in rural areas who have no transport alternative except private cars, and impacts upon the costs of public services; recognises the need for greater research, development and support for reducing our dependency upon oil for everyday use, but in the short-term calls for a freeze on fuel duty in this Budget to protect those affected by the current price spike and further calls for a fuel duty regulator to prevent unexpected spikes in prices from affecting hard working families in future’.

Mr Mather sees that this motion: ‘… expresses very clearly the joint concerns of the nationalist parties and their determination to act together to protect the interests of their constituents. The campaign for fairer fuel taxes will continue’.

Raised tax on Scotch Whisky

Then Mr Darling escalated his incomprehensible attack on Scotland by swerving to focus on Scotch whisky, with whisky distilling a vitally important industry in Argyll as it is across the highlands and islands.

The Scotch Whisky Association is reeling under the shock of yet another steep hike in the tax on Scotland.s premier spirit.

From midnight on Sunday 28th March, the price of a bottle of whisky will rise by 38p. This is made up of a duty escalator increase of 2% plus an inflation element of 3.1%.

The Scotch Whisky Association has said the latest duty rise means that the price of whisky has risen by 21.6 per cent in the past two years. Duty now accounts for £6.66 of the price of a bottle of whisky.

Government’s have long been wont to use whisky as a cash cow – but this particular cow will not milk productively at this rate of going.

Alan Reid, Argyll’s MP, is outraged by this tax and concerned about its potential impact on an industry central to Argyll as a whole and very particularly to the world famous single malt whisky centre of Argyll’s Isle of Islay.

Echoing the argument of the Scotch Whisky Association, Mr Reid points out: ‘This increase is pointless. It will not bring in extra revenue for the Government because the Treasury’s own figures show that after the Chancellor’s previous big increase in duty, the revenue to the Treasury from duty on spirits actually dropped because of falling sales’.

So here we are, in the midst of the worst recession we have known, triggered by the Westminster Government’s deliberately slack rein of regulation of financial institutions, and a Scottish Chancellor introduces a measure which can only cut the sales of an industry important to his country and to many rural economies dependant on jobs in that industry.

It beggars belief. We can only hope it does not beggar Islay.

As Alan Reid says: ‘This duty increase is very unfair to whisky producers because the duty on whisky is already far higher per unit of alcohol than that on beer or wine. The increase is also pointless in health and social terms because binge drinkers’ favourite drink is not Scotch whisky, but other drinks which attract less duty’.

But there is worse to come.

An angry Alan Reid points out that: ‘The Chancellor also announced that, if Labour win the election, they will increase the duty on whisky above the level of inflation every year in the next Parliament’.

Bizarrely this sounds almost like a boast.

Quite apart from the fact that five more years of this shower is an almost physically unbearable prospect, policies like this, which are unintelligent to the point where they can only do damage to a significant and premier industry cannot possibly command support at the Ballot box.

Other matters arising from the budget

Broadband Tax: A new tax is being introduced which will add 50p per month to the cost of a broadband subscription. This is said to be a measure to help fund the costs of installing fibre-optic broadband across the UK, bringing superfast broadband to the majority of household in the UK by 2017.

This too is a discriminatory – indeed a double-jeopardy – tax.

Those households outside ‘the majority’ which are intended to get superfast broadband will mainly be in Scotland – in remote mainland areas and on islands where there topography presents insoluble problems to cable laying or the cost to bring this service to small numbers in outlying places simply will not be borne.

This takes no account of the fact that superfast broadband, of all things, reduces isolation, supports the most effective communications and allows access to markets for businesses in outlying areas.

But the tax will be universal. So those who are planned never to get superfast broadband will pay – and continue to pay – for those who will be given it. This is inherently unfair.

Personal Income Tax and National Insurance: Personal Tax Allowances are to be frozen as of now. people earning over £20,000 per annum will pay more in National Insurance; and businesses will pay an additional 1% on everything over £110 per week paid to an employee. This is estimated to take £4.5 Billion out of the business sector in 2011; and £4.7 Billion in 2012.

£4 Billion extra for war in Afghanistan next year: This amount has been set aside for 2011, to come from the Treasury Reserve for the year rather than be added to the Defence budget, which otherwise is being cut by £700 million.

In truth, it doesn’t matter which pocket they take it from or put it into, it’s our money and we didn’t sign up for the Afghanistan-Iraq gig.

The size alone of the rise for the Afghanistan conflict is an indicator that no early exit is planned.

Tax relief for the computer games industry: The details of quite what the measures are to be on this are not yet clear but, from what we do know, the measures will be tied to the meeting of specific conditions, like outsourcing work within the UK as opposed to sending it abroad.

Such initiatives may be of real benefit to areas like Dundee, Scotland’s capital of online gaming. The innovative University of Abertay became the first UK University to offer a degree in Computer Games creation, working closely with the industry and with the many games companies established in the city. This creative industry is one of Scotland’s leading edge commercial strengths.