Budget 2009: Few cheers as duty rise comes at the worst time, say whisky leaders

Published on Wednesday 22 April 2009 21:57

THE announcement of a 2 per cent rise in whisky duty in yesterday's Budget prompted an angry reaction from the industry and the SNP.

The Scotch Whisky Association called the rise, equivalent to 14p on a bottle of full-strength whisky, as a blow to the industry "at the worst possible time".

Whisky is Scotland's biggest export and is beginning to do particularly well in the emerging markets of China and India. But industry leaders fear the tax rise will send out a message that it is acceptable to impose heavy duties because that is being done in Britain.

Association chief executive Gavin Hewitt said: "A duty increase in a recession is a real blow and follows last year's duty rises on Scotch, the largest since the 1970s. The government should be supporting all UK businesses, including Scotch distillers, with the potential to help drive the economy out of recession. Instead, our industry is being weakened by the alcohol duty escalator."

He claimed the rise would be counter-productive. "As this represents a 5 per cent increase in real terms, the Treasury is likely to see lower receipts as the duty rise aggravates already tough market conditions in the UK, the industry's third-largest market, and weak consumer confidence," he said.

"The duty rise also sets an unwelcome precedent for other governments around the world seeking to raise revenues."

SNP Westminster leader Angus Robertson, whose Moray constituency produces more than half of all Scotch malt whisky, said: "Yet again the UK government is treating the whisky industry as a cash cow. Only last year ministers announced a record 17 per cent in duty hikes, and now the pain continues.

"The whisky sector is one of our key industries and it is a disgrace that the UK Treasury is treating it so badly."

Robert Brown, for the Liberal Democrats, said: "The whisky industry will find it difficult to understand how the SNP can bemoan the rise in whisky duty while pushing for minimum pricing, which the industry fears will do untold damage to their iconic product."

But finance secretary John Swinney saw no conflict between his administration's support for minimum pricing for alcohol to curb binge-drinking and its criticism of the rise in whisky duty.

He said: "Whisky is a quality product which operates in quality markets. Minimum pricing is about tackling low-quality, cheap products which we recognise are causing damage within society."

Russell Hills, head of tax for KPMG in Scotland, said: "The Scottish whisky industry is one of the big losers in this year's Budget."