Budget 2016: Hopes dashed for Scotch duty cut

Hopes for a reduction in the tax levied on Scotch whisky were today dashed by the Chancellor.

The Scotch Whisky Association had pressed for another cut in duty. Picture: Ian Rutherford

Delivering his latest Budget, George Osborne said he wanted to support “responsible drinkers and our nation’s pubs”, and action taken in the last parliament to cut beer duty had saved “thousands of jobs”.

Announcing a continued freeze on beer and cider duty, he added: “Scotch whisky accounts for a fifth of all of the UK’s food and drink exports. So we back Scotland and back that vital industry too, with a freeze on whisky and other spirits duty this year.”

The Chancellor last year cut Scotch duty by 2 per cent and campaigners had pressed for a similar reduction this year in a bid to support an industry that generates exports worth almost £4 billion.

While the Scotch Whisky Association (SWA) welcomed today’s decision to freeze excise duty on spirits, the trade body said a cut would have provided a “bigger boost” for consumers, public finances and the industry itself, which supports more than 40,000 jobs across the UK.

Tax in the form of VAT and excise duty makes up 76 per cent – or £9.91 – of the typical £13 price tag for a 70cl bottle of Scotch, and the SWA said that last year’s 2 per cent cut in excise helped boost revenue for the Treasury by £102 million.

SWA chief executive David Frost said: “We welcome the freeze in excise duty on spirits. We hope that this will sustain continued growth in the UK market for Scotch whisky and thus help improve the public finances.

“But tax is still 76 per cent of the price of an average bottle of Scotch and the majority of the British public think that is unfairly high. We will continue to call for fairer taxation of Scotch, a vital UK industry, and we urge duty reductions in future years.”