Scotland business

Whisky sales dip blamed on 'spirit tax'

Man looking at whisky bottles Image copyright Getty Images
Image caption There were one million fewer bottles sold in the first six months of 2017

Sales of Scotch whisky in the UK have fallen by one million bottles after the UK government increased duty on spirits in the spring budget.

Official figures showed 36.7 million bottles were sold in the first six months of 2017, down from 37.7 million in the same period the previous year.

The figure equates to a 2.6% drop in demand since the tax was increased by 3.9% in March.

The Scotch Whisky Association are calling for the tax to be cut.

They have launched a Drop the Dram Duty campaign calling on Chancellor Philip Hammond to take action in the budget next month.

Overall tax take

The association said than more than £10 of every bottle of Scotch sold for £12.77 comprised of £8.05 in excise duty and £2.13 in VAT.

The HM Revenue and Customs figures showed the overall tax take from spirits had fallen since the March budget increase.

Spirits revenue dropped more than 7% in the first financial quarter of 2017-18, down to £697m, compared to £751m in the same period from April to the end of June the previous year.

Image copyright AFP/Getty
Image caption The Scotch Whisky Association wants the chancellor to take action in his budget next month

This reversed a 7% increase in spirits revenue from the freeze on excise duty in 2016, which boosted the Treasury by £229m.

The 2% cut in spirits tax in 2015 led to a 4% rise in spirits revenue - a £124m increase.

'Lower now'

Karen Betts, Scotch Whisky Association chief executive, said: "Philip Hammond's damaging 3.9% spirits duty hike has hit UK demand for Scotch and seen less money going to the Treasury.

"The chancellor should use his November budget to 'Drop The Dram Duty' and boost a great British success story.

"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."

A Treasury spokeswoman said: "We recognise the importance of the Scotch whisky industry.

"In the UK, tax on a bottle of Scotch is 90p lower now than it would have otherwise been, thanks to duty freezes and cuts introduced in the last three years."

A Scottish government spokesperson said: "We support the responsible consumption of alcohol, and value the significant contribution that the Scotch whisky sector provides to Scotland's economy.

"We believe that taxation should be reviewed to better reflect alcohol content."