Paul Haines (PhD Student)

My thesis analyses imminent innovations in public policy that will impact upon the whisky industry and, through linkage adjustments, the regional Scottish economy. An analysis of the interconnectedness between the whisky industry and the wider Scottish economy reveals that such linkages are substantial.

A holistic conspectus of the whisky industry in the first part of the dissertation reveals that the predominant form of structural change in the past has been merger & acquisition. Such consolidation has permitted economies in marketing and distribution, but it is contended that in this area at least there is scope for further performance improvement in the industry. Nevertheless, with taxation forming such a significant proportion of the final price of the product, realising a sustained increase in demand is deemed to be largely outwith the capability of the industry.

It is advanced, therefore, that two tax-related developments in public policy in the next few years will impact not merely upon the whisky industry, but materially upon the regional Scottish economy as well. The first of these imminent innovations examined is the proposed abolition of the intra-EU duty free concession in 1999. Whilst it is concluded that such a move is inevitable (and economically logical), it is nonetheless determined that this will have a meaningful dterminettal impact upon the whisky industry and Scottish economy.

The current proposals of the European Commission for the harmonisation of alcohol excises across the European Union are critically appraised, and are shown to be grounded on no logical economic principles, but instead, enshrine mercantilist protection for European vinicultures. The rationale for alcohol taxation is considered de novo, concluding that within the United Kingdom & across the European Union, at a minimum all alcoholic beverages should be taxed on an equal basis according to alcoholic content, at a level sufficient to cover an estimate of the negative externalities associated with alcohol consumption.

Mindful of the importance of the whisky industry to the Scottish economy, it is revealed that in times past, the public authorities have been proactive in intervening to secure the continuing prosperity of the whisky industry, and it is contended that such a stance may be required of the present government. The dissertation concludes by advocating a set of reforms to the structure of alcohol excises in the United Kingdom.

An approximate halving of the excise to spirits, such that all alcoholic beverages are taxed equally according to alcoholic content, would ensure that the whisky industry & government could lobby with creidbility for comparable structures to be adopted overseas, particularly in any revised proposals for European excise harmonisation. In addition, it is suggested that the fillip such a reform would give to domestic sales of whisky would mitigate the negative effects upon the whisky industry & regional Scottish economy of losing the intra-EU duty free concession in 1999.

In addition to my academic interest in the whisky industry, I have also been very closely involved with The Quaich Society. This was established in 1994 with the principle aim of furthering understanding of, and appreciation for, Scotch whisky, as an integral part of the heritage, economy and culture of Scotland. As well as regular whisky tastings, we have organised several limited edition whisky bottlings, including one to commemorate the Open Championship in St Andrews in 1995, Highland Balls, trips to distilleries, and ceilidhs.

Since my assuming the Presidential Office I have attempted to expand our horizons by organising additional tastings of other alcoholic beverges, such as Port, Sherry & Champagne. The rationale behind these tastings are that as well as being enjoyable, they are an attempt to inform members as to the vast arrray of different products on the market, many of which most people have never encountered.

These tastings have become highly successful, with in excess of 90 people seeking admission on some occasions. It is encouraging too that a broad cross section of the University is represented, including members of the academic staff, administrative staff, friends and relatives of the same, postgraduates and undergraduate students.

Paul Haines completed his PhD in 1998 on "The Whiskey Industry & The Regional Economy: An Economic Analysis of Imminent Innovations in Public Policy". Chapter 5 of that was published as a pamphlet entitled Freedom an' Whisky Gang Thegither by the Adam Smith Institute. It was favourably reviewed in the financial pages of the Guardian on 20th Deccember1999 as follows:

Chancellor urged to slash duty on drink

Britain should slash "sin taxes" on alcohol, particularly spirits, to stop cross-border smuggling and boost the whisky industry, according to one economist.
There is little evidence that pushing up the price of alcohol through excise takes dissuades people from drinking, according to Dr Paul Haines from the Adam Smith Institute. In a report out today he says the treasury is far too dependent on alcohol duties and should start weaning itself off the £5.6bn the nation's tipplers pay in taxes each year.
"Only limited inroads on the problems associated with excessive drinking can be expected from a policy of high alcohol taxes," Mr Haines says. "Moreover, recent evidence suggests that alcohol consumption in the UK has plateaued and fears that rising real incomes will occasion ever higher levels of alcohol consumption may be exaggerated."
Further increases in alcohol duties will only lead to further smuggling, and even more jobs lost to Britain, according to Mr Haines. In recent years the treasury has taken less revenue when it has increased duties and more revenue after a freeze or reduction on duty.
Mr Haines proposes lowering duties and equalising levies on different types of liquor. This would involve reducing taxes on beer by 7.6%, wine by 20% and spirits by 47%.
That would boost jobs, particularly in Scotland where 70,000 people depend on the whisky industry for work.

Charlotte Denny, The Guardian, 20 December 1999.

"I thought you might appreciate a copy of this article of mine published by the Adam Smith Institute and released today. I wrote it just before I left St Andrews, but it has taken the Adam Smith Institute (ASI) until now to publish it! There was quite a good review of the report in the finance section of today's Guardian, and this afternoon I was invited to record a telephone interview for a radio station based in Inverness, broadcasting throughout Speyside.

Looking over it now the article appears rather amateurish, but then I guess it would be a cause for concern if I didn't feel that way about something I had written over a year ago. I was impressed though with the formatting, especially the ASI superimposing a class of whisky in Miss Liberty's hand. This was very apt in the context of the title, which I'm sure you as a fellow Burns fan, will know comes from The Author's Earnest Cry & Prayer:

"Freedom An' Whisky Gang Thegither
Tak aff your dram!"

This time last year I had just returned from a voyage to Newfoundland. After Christmas I joined the same ship again in Aberdeen (passing right through Cupar on the train), then spent three months on the cruise liner Edinburgh Castle. The escalating costs of refitting this aged Italian steam ship finally bankrupted the company I was with. Witnessing the whole process at first hand was sad but quite entertaining at times.

Fortunately Cable & Wireless Marine (subsequently bought out by the American firm Global Crossing) agreed to continue my cadetship.

I have just returned from a 15 week odyssey to Singapore & Hong Kong, Hawaii, Panama and Bermuda. Singapore & Hong Kong were pretty exciting, and I enjoyed contrasting the differing approaches these two ex-British colonies have taken to managing modern capitalist economies. Singapore is much more dirigiste, and as such has a very different atmosphere than Hong Kong.

I am returning to college in January for the final phase of studying before my MCA Oral Exam, which will hopefully be in September of 2000. I enjoy my new career greatly, and I believe that together with my university qualifications, it has opened up many more potential opportunities to me."