Taxman will pocket £10 from every bottle of whisky sold

SCOTCH whisky bosses reacted with anger yesterday after the Chancellor announced excise duty on spirits will soar – meaning more than £10 for every average bottle of the spirit will go to the Treasury.

Philip Hammond has unveiled plans which will mean 79 per cent of the cost of a bottle of Scotch will be taxes – including excise duty and VAT.

The proposals in yesterday’s Spring Budget statement will see excise duty increase by 4 per cent, or 36p per bottle, which was last night described as a ‘major blow’ by whisky bosses.

The changes will mean that tax on an average 70cl bottle selling for £12.90 will soar to £10.20. Excise duty will form £8.05 of this, while £2.15 is VAT.

This makes duty on spirits £28.74 per litre of pure alcohol, up from £27.66 last year – and a 21 per cent increase from 2010.

The Scotch Whisky Association (SWA) has recently lobbied the UK Government, calling for duty to be cut as it believed this would increase revenue with a hike in sales.

Yet Mr Hammond told MPs in the House of Commons he ‘will make no changes to previously planned upratings of duties on alcohol and tobacco’.

He added: ‘The tax measures I have announced enhance the sustainability of our public services into the future and, by improving the fairness of the system, help us to keep tax rates low.’

Now the SWA has hit out at what it has described as a disappointing announcement.

The organisation is calling on a review of the alcohol duty system, which it believes is damaging one of the UK’s biggest and key industries.

Julie Hesketh-Laird, SWA acting chief executive, said: ‘A nearly 4 per cent duty rise and a 79 per cent tax burden on a bottle of whisky is a major blow, reversing recent progress.

‘Distillers will find it hard to understand why the Chancellor is penalising a strategically important British industry with this tax increase.

‘At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit.

‘Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law.

‘The system is in need of a fundamental review and reform to make it fair and competitive.’

The Scotch whisky industry currently supports 40,000 jobs across the UK and adds more than £5billion to the UK economy every year. Despite supporting the Remain campaign during last year’s EU referendum, the SWA has repeatedly spoken of the opportunities which Brexit could provide and how it could boost sales with the prospect of trade deals.

But yesterday the body warned that Mr Hammond’s plans could undermine the recovery of the UK market.

Speaking in Glasgow last week, Prime Minister Theresa May hailed the whisky industry and highlighted the contributions it makes to the UK economy.

But industry bosses yesterday questioned the Government’s commitment to the sector. Charles Ireland,

managing director of Diageo Great Britain, said: ‘Today’s tax blow from the Chancellor is bad for the economy, bad for business and bad for the British public.

‘It is staggering that the Prime Minister stood up in Scotland only on Friday and said that Scotch Whisky is “a truly great Scottish and British industry... and directly supports tens of thousands of jobs”, and just five days later her Chancellor hammers this industry at home.

‘Tax on Scotch whisky is now so high, nearly 80 per cent of the price of an average bottle will go straight to the Government.

‘We believe this duty rate increase will reduce total tax revenue. We are calling on the Government to reverse this punitive tax hike and fundamentally overhaul what is clearly a flawed excise duty system.’

Scottish Labour economy spokesman Jackie Baillie said: ‘The sector is worth an estimated £5billion to the UK economy – £4billion of which comes from exports – but the Chancellor’s Budget situation puts that at risk.’