Scotland’s whisky industry has repeated its call for the “unfair” alcohol duty escalator to be scrapped as new figures reveal a 3% slide in the UK market during 2013.
HM Revenue and Customs statistics show around 2.5 million fewer bottles were made ready for the shelves last year, thanks to a slowdown in demand as increasing tax and duty helped drive up prices.
Scotch Whisky Association chief executive David Frost used the news to again urge Chancellor George Osborne to axe the automatic escalator in next week’s Budget, claiming the move would benefit both consumers and the public finances.
He said the fall in the number of bottles released from bond for sale in the UK was “disappointing” but marked just the latest step in a significant decline since the escalator was introduced six years ago.
A total of 87.5m bottles were made available for sale during 2013, down from 90m the previous year while the market has fallen by a total of 15% since 2008, when 103m bottles were taken out of storage.
“In next week’s Budget the Chancellor has the perfect opportunity to support a vital Scottish industry,” Mr Frost said. “He should scrap the unfair alcohol duty escalator and freeze duty this year.
“Since the introduction of the escalator in 2008, the UK market for Scotch Whisky has shrunk by more than 15%. Fairer tax treatment would help address this decline in the UK.
“It would send the right message to overseas governments in markets where imported products, such as Scotch Whisky, face discrimination. It would also reflect and support the UK’s drive for export-led growth.”
The SWA, part of the Call Time on Duty campaign alongside the Wine & Spirit Trade Association and the Taxpayers’ Alliance, says the Scotch Whisky industry supports 35,000 jobs across Scotland many in fragile rural communities.
Its calculations show some 79% of the average price of a bottle of whisky is now accounted for by tax and VAT charges, with the escalator having increased duty by 2% above the rate of inflation each year. Since the economic crisis struck, excise duty has risen by a total of 44%.
A similar escalator was removed from beer sales in last year’s Budget, with duty also cut. The SWA says whisky drinkers now pay 48% more tax than beer drinkers for the same amount of alcohol.
The Call Time on Duty campaign picked up significant support for its campaign from Scottish Conservative leader Ruth Davidson last month.
In a move interpreted by many as a sign that a duty freeze was already being considered behind the scenes in Whitehall, Ms Davidson marked the UK Cabinet’s meeting in Aberdeen by writing to Mr Osborne to urge him to act on the tax burden facing the sector.
“It’s now time the Treasury gave it a break and axed another increase in duty,” she said. “Whisky has more than pulled its weight in terms of tax and duty over the years.”