Page last updated at 07:29 GMT, Tuesday, 25 November 2008

'Whisky sour' claim after Budget

whisky generic

The chancellor has been accused of slipping a "whisky sour" into his pre-Budget report, with an 8% rise in the excise duty on spirits.

The Scotch Whisky Association said, despite Alistair Darling's decision to cut VAT, the announcement would mean an extra 29p on an average 70cl bottle.

It said the move, announced in the footnotes to Mr Darling's speech, was "counter-productive".

Campbell Evans of the SWA said the rise was a "damaging blow" to the industry.

In his pre-Budget statement, the chancellor announced a rise which would see the duty on a bottle of whisky rise by 47p to 6.45.

A temporary reduction in VAT, down 2.5 percentage points for the next 13 months, will see this rise reduced.

Actually when you look at the whisky industry, I have helped that industry for many many years
Chancellor Alistair Darling

Mr Evans told BBC Scotland: "This tax rise is likely to be permanent - the fall in VAT is only temporary.

"The high level of excise duty that applies on spirits means the rise will be 29p on a bottle of Scotch - that's a 4% rise, and they have failed to understand that this measure has a disproportionate affect on Scotch whisky compared to other sectors.

"The treasury's own model shows that if they put tax up on spirits they will see falling revenue. This measure was to try and keep revenues up - they're already losing money. It's not got any logic or any sense."

The chancellor defended himself on BBC Radio Scotland. He said the duty rise had to be seen alongside the cut in VAT.

He said: "I've not been able to pass on the VAT reduction in relation to alcohol, but what I've done is I have had a compensatory increase in the duty.

"Actually when you look at the whisky industry, I have helped that industry for many many years. I've got to balance the books - at the end of the day you've got pay for it and people understand that."

The duty increase was branded a "smash and grab raid" by SNP MP Angus Robertson, who said the increase was the biggest in nearly four decades.

Mr Robertson, who represents the malt whisky-producing Moray constituency, said: "The chancellor did not even have the decency to specifically mention his tax increase on the whisky industry.

"The bad news was buried deep in the pre-budget report."

He added: "It is totally unacceptable that this vital industry should be a casualty to Alistair Darling's desperate attempts to resuscitate the UK economy."

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