Whisky sales drop after tax increase

Sales of Scotch whisky in the UK have fallen by one million bottles after the UK Government increased spirits tax in the spring Budget.

Official figures show 36.7 million bottles were released for sale in the first six months of 2017, down from 37.7m in the same period the previous year.

The 2.6% drop in demand follows March budget increase in spirits duty by 3.9%, taking tax up to 80% of the cost of a bottle of Scotch.

The Scotch Whisky Association has launched the ‘Drop the Dram Duty’ campaign calling on Chancellor Philip Hammond to cut tax on spirits in the Budget next month.

The association said of an average bottle of Scotch sold at £12.77, more than £10 goes to the Treasury, comprised of £8.05 in excise duty and £2.13 in VAT.

The HM Revenue and Customs figures show the overall tax take from spirits has fallen since the March Budget increase.

Spirits revenue dropped more than 7% in the first financial quarter of 2017-18, down to £697m compared to £751 million in the same period from April to the end of June the previous year.

This reversed a 7% increase in spirits revenue from the freeze on excise duty in 2016, which boosted the Treasury by £229m.

The 2% cut in spirits tax in 2015 led to a 4% rise in spirits revenue, a £124m increase.

Karen Betts, Scotch Whisky Association chief executive, said: “Philip Hammond’s damaging 3.9% spirits duty hike has hit UK demand for Scotch and seen less money going to the Treasury.

“The Chancellor should use his November Budget to Drop The Dram Duty and boost a great British success story.

“Cutting tax would send a strong signal that the Government believes in a world-famous UK manufacturing industry which supports 40,000 jobs and plays a key role in Scotland’s economy.”

A Treasury spokeswoman said: “We recognise the importance of the Scotch whisky industry. In the UK, tax on a bottle of Scotch is 90p lower now than it would have otherwise been, thanks to duty freezes and cuts introduced in the last three years.”

This week it emerged that three whisky distilleries are to reopen.

Diageo will bring back the Brora and Port Ellen distilleries thanks to a £35m investment. Meanwhile, Ian Macleod Distillers will resurrect Rosebank.

Picture: Getty Images. The Scotch Whisky Association has launched the Drop the Dram Duty campaign.