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Scotch Whisky sales dive on the back of hiked spirits tax

Published:  12 October, 2017

Scotch whisky sales fell by one million bottles in the first half of 2017 in the UK following the hiked spirits tax in the March budget.

In the first six months of this year, 36.7 million bottles were released for sale – down from 37.7 million in the same period last year, according to official HMRC figures released today.

The 2.6% drop follows Chancellor Philip Hammond’s decision to increase spirits duty in the spring budget by an inflation-busting 3.9%, meaning tax now makes up 80% of the cost of a bottle of Scotch.

Of an average bottle sold at £12.77, more than £10 goes straight to the Treasury.

As a result of the drop in domestic demand for Scotch, the Scotch Whisky Association (SWA) has launched a Drop The Dram Duty campaign calling on the Hammond to give “fairer tax treatment” to spirits in his November budget.

“The Chancellor should use his November Budget to Drop The Dram Duty and boost a great British success story,” said SWA chief executive, Karen Betts, adding Hammond’s spirits duty hike had hit UK demand for Scotch and seen less money going to the Treasury.

“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.”

HMRC figures also revealed the tax take from spirits had fallen since Hammond’s spring increase – meaning less money for the Treasury, with spirits revenue down more than 7% in the first financial quarter of 2017/18 to £697 million from £751 million in the same period from April to the end of June the previous year.

In contrast, a 2% cut in 2015 had seen spirits revenue rise by 4% - giving a £124 million boost to the Treasury. And, a freeze in 2016 led to a revenue increase of more than 7%, pouring an additional £229 million into the Chancellor’s coffers, according to the SWA.

In the UK, the fourth biggest market for Scotch, the spirit adds £5 billion annually to the economy and is worth more than £4 billion in exports, supporting 40,000 jobs across the nation.