Whisky tax hike ‘will hit sales and put jobs at risk’

THE whisky industry is fighting to prevent yet more tax being added to the spirit, saying it already carries duty of more than £11.

This is four times more than in Japan and 2.3 times higher than in Germany.

Alcohol is taxed by volume (ABV). By litre, whisky has an average duty of £11.50 – a 12.5 per cent litre of wine has tax of £2.89, 4.2 per cent beer has 80p of tax, while 5 per cent cider has 40p of tax.

Duty on an average 750ml bottle of wine is around £2.16, while a 4 per cent pint of ABV beer is taxed at 44p per pint, industry figures show.

There are fears hiking tax on whisky in the next Budget could hit sales – damaging a multimillionpound industry and key employer.

The Scotch Whisky Association estimates that Scotland’s national drink supports 40,000 jobs across the UK and represents a value of £4billion in exports – a vital component of the country’s trade portfolio as Brexit approaches.

Charles Ireland, British boss of drinks giant Diageo, has claimed a tax hike would be counterproductive because increased duty has in the past lowered Treasury takings.

HMRC imposed a 3.9 per cent rise in spirits duty in March but the tax take fell after whisky sales dropped by a million bottles in the first half of 2017.

Mr Ireland said: ‘Our modelling shows there would be a negative impact on the strength of the market at home.

‘The spirits market suffered a downturn when the last increase happened earlier this year... there would be another downturn if the tax increased in the next Budget.’

He said an ‘unfair’ levy in the November 22 Budget would hamper overseas business, by making it harder to argue against any harsher tax regimes in other countries.

Mr Ireland said: ‘It will make it more difficult for us to argue against increases and unfair treatment overseas.

‘There is both a domestic impact for our industry and an international impact for our industry.’

Scotch whisky is Britain’s biggest food and drink export, with Diageo holding around a third of the global market.

Mr Ireland said Diageo had passed the March tax hike down to consumers, but would reduce prices if the Government moved to cut the levy.

The Government is trying to bolster UK exports by laying the groundwork for free trade deals once Britain breaks from the European Union.

Diageo chief executive Ivan Menezes joined the Prime Minister’s trade delegation to India last year, where she suggested that Scotch whisky producers could benefit if the UK strikes a free trade deal with the Asian nation.

A Treasury spokesman 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. In addition, both businesses and their customers have saved over £2billion since 2013 thanks to changes to alcohol duty.’

The pleas against a tax hike come after revelations that sales of beer in Britain’s pubs, bars and restaurants has fallen by the largest margin in five years.

Around 35million fewer pints were said to be sold in the three months to September, compared with the same period last year.

According to the British Beer and Pub Association, the figure represents a 3.6 per cent drop in our appetite for beer.