Chancellor Urged To Review Tax On Whisky As Sales Slump

Scotch Whisky sales have slumped following a hike in tax duty. Official HMRC figures showed 36.7 million bottles were sold in the first 6 months of this year compared to the same period in 2016. The Scotch Whisky Association said the fall in sales could be attributed to a near 4% increase in duty on spirits that was imposed by the chancellor in his March budget. The Association’s CEO Karen Betts has urged the chancellor to use his November budget to drop the dram duty and “boost a great British success story”. Betts said, “The damaging duty hike has hit UK demand for Scotch and seen less money going to the Treasury.” She added, “Cutting tax would send a strong signal that the Government believes in a world-famous UK manufacturing industry which supports 40,000 jobs and plays a key role in Scotland’s economy, accounting for more than £4billion in exports”

Industry figures show that an average bottle sold at £12.77 will generate more than £10 in tax revenue for the Treasury. But the tax increase doesn’t appear to be working according to the industry trade body citing a decline in tax revenues from spirits of more than 7% to £697million from £751million in the first 3 months of the financial year.

The industry has come under intense competition from distillers in East Asia and the US, diminishing export markets and affected overseas sales. Past growth for Scotch whisky has been driven by the success of single malts appealing to luxury and prestige markets. New entrants have included small independent businesses who have been able to raise the necessary funds to set up operations. Investment payback is slow and many small businesses have had to diversify into gin making to maintain cash flow.