SCOTLAND’s whisky industry last night accused the chancellor of delivering a blow to the sector.
Alistair Darling announced taxation on alcohol, cig-arettes, other tobacco products and fuel would be lowered due to the cut in VAT.
But – on the same day that a distillery was brought back into production after 22 years – he promptly announced increases in duties for the products, claiming the changes should keep the overall cost to consumers the same.
Duties for all types of alcohol will rise by 8% from December 1, adding to the 9% increase in excise that was announced at the time of the Budget in March.
This is only partially offset by the cut in VAT, adding a further 29p to a standard bottle of spirits which has left the whisky industry fuming. Distillers also believe it will hit Treasury revenues by introducing a further increase in taxation at a time of softening demand in the UK market.
Scotch Whisky Association chief executive Gavin Hewitt said: “The 8% excise duty rise is counterproductive and a damaging blow to Scotch whisky, depressing consumer demand in a fragile market. The alcoholic drinks industry needs as much of a boost as the rest of the economy.
“There is no logic to any duty increase. Alcohol revenues have already fallen by £40million this year on the back of the 9% excise rise in March. It disadvantages Scotch whisky again at home and possibly overseas. The Treasury is likely to lose more revenue at a time when it needs every penny.”
The SWA said the latest rise in excise duty translated into a 4% increase in taxation, accounting for VAT, on a standard bottle of whisky.
CBI Scotland assistant director David Lonsdale said: “We were disappointed at the time of the Budget when the chancellor failed to continue the previously successful approach of freezing duty on spirits, and this further net increase in taxation on a bottle of whisky is regrettable.”
Yesterday Glenglassaugh Distillery, near Portsoy, which was mothballed in 1986, was officially reopened.