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Budget: Whisky and beer

Whisky raises glass to ‘historic’ duty cut as beer price also falls

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Whisky distillers are raising a glass to the Chancellor after George Osborne cut the rate of duty on spirits by an “historic” 2%, following a high-profile campaign by the drinks industry.

A penny was also knocked off the excise duty on a pint of beer, while cider duty was cut by 2% and duty on wine was frozen.

The move comes after figures from the Scotch Whisky Industry (SWA) revealed that sales of standard 70cl bottles of whisky in the UK fell from 87.5 million in 2013 to 83.3 million in 2014, a drop of nearly 5%, which the trade body blamed on high taxes.

Following the cut, the duty burden on a 70cl bottle of Scotch at the average price of £12.90 has been reduced by 16p from £7.90 to £7.74.

The total tax burden, which also includes VAT, now stands at £9.89, or 77% of the average price of a bottle of whisky, down from 78%.

David Frost, chief executive at the SWA, said: “This is a historic decision and only the fourth time whisky duty has been cut in a century.

“The Chancellor’s announcement will be toasted across the whisky industry and by consumers who are getting a fairer deal on tax when they have a drink of Scotch.

“The move is a major boost to our industry as we look to grow again in the UK, and equally sends out an important signal on fair taxation to our export markets.

“The industry is raising a glass to George Osborne and his Treasury team, as well as to all those who have supported our campaign over the past two decades.”

Figures from accountancy firm EY had previously suggested that a 2% cut in spirits duty would boost the public finances by £1.5 billion.

The Drop the Duty Campaign – which brought together the SWA, the Wine & Spirit Trade Association (WSTA) and the Taxpayers’ Alliance – had said the cut would boost the industry’s contribution to economic activity by £3.9bn, from £46.6bn to £50.4bn, and would increase its direct contribution to the UK’s gross domestic product (GDP) by £900 million from £11.8bn to £12.7bn.

On the cut in beer prices, John Gilligan at Tennent Caledonian Breweries, said: “Tennent Caledonian Breweries welcomes the Chancellor’s announcement to cut beer and cider duty, which is good news for both the industry and the consumer.

“However, we continue to raise concerns around the disparity between Scotland and England and Wales around the issue of tied pubs. We strongly believe that Scottish tenants should have a Market Rent Only (MRO) option as an alternative to being compelled to pay inflated rent and buy a restricted range of  beer at inflated prices from their pub company landlords

“We look forward to political progress on this issue.  If this is delayed, and the rest of the UK is allowed to unburden themselves from tied pubs, then we place Scottish pubs and producers at a serious disadvantage.”

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