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Last Updated: Monday, 5 July, 2004, 10:49 GMT 11:49 UK
Whisky tax stamps given go-ahead
Whisky bottles
Stamps will be added to bottles from 2006
The Treasury is to go ahead with plans to put duty stamps on bottles of whisky despite strong opposition.

The government has published its response to a highly critical report from the Scottish Affairs committee.

The committee had said that it was not convinced that pre-paid strip stamps were the best way to tackle fraud.

However, the government claimed that the tax stamps were a "timely and effective solution" to the growing spirits fraud problem in the UK.

It said that the government had been actively considering how best to tackle spirits fraud for three years.

Estimates by Customs claim that the level of fraud costs the Treasury 600m a year.

Appear genuine

And the government had challenged the industry to come up with an alternative which would deliver at least 160m.

The Scottish Affairs committee (SAC) disputed the Customs estimate of fraud levels and said that the strip stamp option was "disappointingly negative and unimaginative".

The idea of sticking pre-paid stamps on each bottle of whisky, to prove that duty had been paid, was described by the committee as a "19th century solution to a 21st century problem".

It said the scheme had a number of flaws, most notably the expensive machinery required to produce the stamps.

The government claimed that it had set aside a fund of 3m to minimise the burden of compliance, especially for smaller firms.

It rejected fears that strip stamps could be counterfeited, saying technology had improved greatly.

And it added it was not concerned by the possibility that fraudsters would use the stamps to make illegitimate spirits appear genuine.

The tax stamps are due to come in by 2006.

A spokesman for the Scotch Whisky Association said it had known since the Budget in March that tax stamps were to be introduced.

He said the industry was now holding detailed discussions with the government to ensure the scheme was introduced in the least damaging way possible.

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