Scotland pays £2bn in sin taxes

Taxpayers in Scotland pay a disproportionate share of sin taxes in the UK, paying 13.4% of spirits duties and 11.4% of tobacco duties last year, equivalent to £229 for every adult

Scotland makes up 8.5% of the adult population of the UK, but paid 13.4% of the UK total of spirits duty (£458m), 8.8% of wine duty (£374m) and 11.4% of tobacco duty (£1bn). Betting and gaming taxes hit £258m accounting for 9% of the total collected from UK wide taxpayers.

While Scottish taxpayers paid just over £1bn in tobacco duties last year, English taxpayersforked out £6.8bn in tobacco duties over the same period, equivalent to £156 per adult.

This disproportionate tax bill is set against the backdrop of total tax take, with Scotland only paying 7.6% of taxes in the UK overall but landed with 13.4% of sin taxes. The average gross disposable household income in Scotland is more than £1,600 per year lower than in England.

This means Scotland is substantially over-represented in its share of so-called sin taxes, those taxes levied on consumption of goods deemed in some way harmful to society, according to analysis by UHY Hacker Young, the national accountancy group.

UHY Hacker Young says that while sin taxes are an effective way to discourage people from excessive, harmful consumption, the government must be careful to ensure that the burden of these taxes does not fall disproportionately on those with lower incomes.

Clive Gawthorpe, partner at UHY Hacker Young, says: “The government’s targeting of taxes on ‘harmful’ consumption has hit taxpayers in Scotland noticeably harder than those in England.

‘It is understandable that the Treasury would seek to levy taxes on those whose consumption may create a bigger burden on public services. However, this approach must be balanced off against the risk of hitting lower-income people disproportionately hard.

‘There is also the possibility that over-taxing of tobacco, in particular, will result in more people turning to illegally imported goods. That could see HMRC’s income from these duties fall, rather than rise.’

Sara White

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