Spirits groups appeal to Chancellor for duty reduction

The UK spirits industry has kick-started pre-Budget negotiations by calling for a reduction in duty rates.​

Both the Scotch Whisky Association (SWA) and the Gin and Vodka Association (GVA), the respective lobby groups for white and dark spirits, met with John Healey MP, economic secretary to the treasury, to put forward their case for a cut in duty.

Previous attempts to alter the government's stance on drinks taxes have by and large fallen on deaf ears, although the Treasury has frozen duty rates on all spirits in the last five Budgets.

However, despite the current economic climate, both the SWA and GVA are hopeful that Gordon Brown will go a step further and ease the tax burden on spirits producers, by four per cent, for the first time since November 1996.

Scotch is taxed at least one and a half times higher than the same amount of alcohol served in beer and wine, while the tax on the average bottle of gin and vodka is 75 per cent. Consumers pay 27.38p tax on a pub measure of whisky (35ml) but only 16.65p and 19.30p on the same amount of alcohol served as beer (half pint) and wine (125ml) respectively.

Ian Good, chairman of the SWA, claims spirits tax is so high that even government economists have conceded that a cut in the duty on scotch could boost revenues.

"Resuming the policy of reducing tax discrimination against spirits would be a win-win situation," said Mr Good. "Recent Budget duty freezes have stabilised the scotch market, but official estimates suggest that a cut in the duty on Scotch could boost revenue. We are not looking for a tax advantage, just equality of opportunity."

Tony Mair, chairman of the GVA, added: "The industry has done much to help itself. Over £80m has been invested by our companies in modernisation and integration.

"But taxation and regulation are still areas that cause us concern. These functions of government cannot be overcome by new product lines, greater use of the internet or state of the art bottling technology.

"Competitiveness of companies is, in part, in government hands. What we need is a level playing field and fair competition."

More than 8,000 jobs in the UK are dependent upon the production of gin and vodka while the scotch whisky trade supports approximately 65,000.