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Last Updated: Wednesday, 10 December, 2003, 16:30 GMT
Anger at whisky stamp plans
Whisky bottles
Mr Brown wants action to tackle fraud
The Scotch whisky industry has reacted with "dismay" to the chancellor's plans to tackle spirit duty dodgers.

Gordon Brown said the industry may have to affix stamps to legitimate bottles of whisky to deter fraud.

However, the industry and political opponents said this will force whisky firms to alter bottling plants and will cost more than 200m.

The Scotch Whisky Association (SWA) also said it was surprised that the "strip-stamping" proposal, which was discussed and apparently thrown out 18 months ago, was back on the agenda.

In his pre-Budget report to the Commons, Mr Brown said that duty is evaded on one in six bottles of Scotch.

He said stamping is not an action he wishes to take, but may be the only way to combat fraud.

Consumers, traders and customs officers will be able to identify spirits on which UK duty has been paid.

The cost to the industry could drive some small producers out of business
Angus Robertson
Scottish National Party MP
Mr Brown told MPs that he will work with the industry if it comes up with alternative proposals.

If not, then the next Finance Bill will implement the stamping measure.

The chancellor said he will then consider extending the freeze on duty for whisky and all spirits for every year of this parliament.

Mr Brown said: "Recent trends suggest that despite the freeze in duty for spirits an estimated one bottle in every six bottles of spirits sold in this country is evading duty.

"I will now make provision to implement in the next Finance Bill the Rourkes Report recommendation that we stamp spirits bottles.

'Fought off'

"If, after discussion with the industry, there is still no workable alternative to this proposed we will legislate."

Gavin Hewitt, Chief Executive of the SWA, said: "Only 18 months ago, the chancellor dismissed tax stamps as a viable option.

"Since then the industry has tried to work in partnership with the government on measures to tackle alcohol fraud, whilst ensuring the legitimate trade is facilitated.

"We will be working hard to convince the Treasury that tax stamps would be a backward step damaging productivity and competitiveness and that alternative, more risk-based measures would be more effective."

Mr Hewitt also said the SWA believes the Treasury has "overestimated" the level of alcohol fraud.

Scottish National Party MP Angus Robertson said: "Treasury plans to introduce this daft and expensive scheme were successfully fought off recently with cross-party opposition and a high profile campaign by the Scotch Whisky Association.

Peter Duncan
Peter Duncan: "A hammer blow"
"Any initial outlay for companies to buy the necessary application machinery will run into millions of pounds.

"The stamps would also have to be paid for up front, presenting a security and cash flow nightmare for all concerned.

"The cost to the industry could drive some small producers out of business."

The Moray MP added: "Anti-fraud measures are important and the Scotch Whisky Association has been discussing options with the Treasury for nearly two years."

Liberal Democrat John Thurso also said the Treasury had already been warned about the "pretty substantial costs" involved in implementing the scheme and the chancellor was now acting in bad faith and failing to listen.

The Caithness, Sutherland and Easter Ross MP said: "As far as the industry was concerned they were still consulting with the Treasury but what they heard was a megaphone boom from the dispatch box rather than a proper answer."

Peter Duncan, the Tory MP for Galloway and Upper Nithsdale, said there was unanimous support for combating fraud but he added: "To threaten with such a hammer blow this kind of tax stamp is going to come as devastating news to the industry in Scotland."

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