Scotch Whisky Association urge UK Government to drop duty hike in March budget over lost revenue

The trade body had previously claimed the sector was suffering from “discrimination”.

The Scotch Whisky Association has urged the UK government to cut alcohol duty after the Treasury lost out on nearly £100 million in tax revenue.

Analysis of new HMRC tax receipts data by the Scotch body found that duty revenue from spirits fell to £1.87 billion between August to the end of December, following the biggest excise duty rise in 40 years.This represents a year on year drop of five per cent, that’s cost the Treasury £98 million in revenue and follows Chancellor Jeremy Hunt raising excise duty on Scotch Whisky and other spirits by 10.1 per cent from August 1 last year.

Mr Hunt then froze duty at its current level in his November autumn statement.

Scotch Whisky suppliers have warned the rise in duty is damaging the industry,

The August increase confirmed the UK as having the highest level of duty on spirits in the G7 and fourth highest in Europe, with consumers in Paris paying half the tax on a dram they would in Edinburgh.It leaves the treasury claiming nearly three quarters of the cost of a bottle of Scotch.

Distillers have now urged the Chancellor to cut alcohol duty in his March budget to support businesses, including pubs.

Graeme Littlejohn, Director of Strategy at the Scotch Whisky Association, said: “There is an inescapable conclusion – the tax rise hasn’t worked, and the Chancellor should cut alcohol duty in the Budget on 6 March.

“Doing so will support the public finances and businesses, including pubs and restaurants. Scotch Whisky and spirits represent a third of hospitality alcohol sales – so if he wants to back pubs, then he needs to make sure spirits consumers also have the tax breaks available to other alcohol. Backing pubs is not just about pints.

“UK spirits duty is now almost double the EU average, and highest in the G7 developed economies. The budget on 6 March must start to turn the tide away from high taxes and towards a more dynamic approach which supports Scotch."

At the time of the rise in alcohol duty, Scottish Secretary Alister Jack is said to have conceded it was “not what I wanted for the Scottish industry”.

The SWA had previously warned the rise will fuel inflation, dent consumer confidence and add to pressures in the hospitality industry.

Lib Dem MP Alistair Carmichael said it was “typical” for the Tory government to raise taxes and lose money in the process.

He said: “The Treasury attitude always seems to be that they know better than everyone else. This is not the first time that their forecasts have been wrong - most notably when the coalition government cut the level of duty on spirits. The Treasury forecast a decline in revenue - instead we produced a significant increase in tax take.

"Their stubborn attitude is a real threat to an industry that is of critical importance to some of the most economically fragile communities in the country. If this is the Tories' idea of levelling up our communities then I would hate to see what levelling down would look like."