Government sticks to whisky duty label plan

The government is sticking with plans to glue "duty-paid" labels on to whisky bottles as an anti-fraud measure.

Despite opposition from the industry, as well as members of the Scottish Parliament, customs minister John Healey said the pre-paid tax stamps are still likely to be made compulsory on bottles "imported" into the UK from Scottish distilleries.

The minister visited whisky manufacturing sites during a trip to Scotland to discuss the plans, designed to stem the estimated £600m a year that the Treasury loses in unpaid duty on whisky.

The Scotch Whisky Association (SWA) says the stamps would add to the industry's costs, while at the same time be easy to counterfeit.

SWA chief executive Gavin Hewitt said: "Fraud must be defeated but paper stamps over the top of a whisky bottle is a 19th century attempt to beat 21st century fraudsters.

"Experience shows that strip stamps do not work, and that they have been rejected or abolished by countries around the world. They make a mockery of the government's commitment to reduce red tape and costs on industry.

"Tax stamps are opposed by the whole spirits industry. They would be a hammer-blow to scotch producers, in particular smaller distillers, with compliance costs running into millions of pounds. Competitiveness at home and abroad will be badly damaged."

MSPs have called on the Scottish Executive to oppose any plans to impose the system from Whitehall.

The SWA believes that improved security systems in bonded warehouses and during distribution would tackle fraud better. But it disputes the Treasury's estimates and the National Audit Office has been asked to look at the fraud figures cited by Chancellor Gordon Brown.