George Osborne to slash tax on whisky

George Osborne is set to slash the amount of tax paid on bottles of whisky sold in the UK.

The Sunday Post understands the Chancellor is planning to use next week’s budget to axe the automatic annual increase in duty on whisky.

Tax and VAT now form 79% of the price of an average bottle of Scotch whisky sold in the UK and the industry, which supports 35,000 jobs, is pressing to have the automatic hikes stopped following a slump in domestic sales.

The move will form part of a number of measures in next week’s Budget, the last before September’s referendum, aimed at shoring up the No vote.

Scottish Conservative leader Ruth Davidson has personally lobbied the Chancellor on the issue and yesterday said it would be a “poor show” for any Tory to hike the taxes on a single product to above 80%.

Speaking to The Sunday Post last week, Chief Treasury Secretary Danny Alexander who has distilleries in his constituency and has previously campaigned for fairer tax for whisky said: “We have had lots of representations from lots of industries, including the Scots whisky industry.

“How can I put it, I have been paying particular attention to those submissions and they make an interesting and important argument.

“But as to whether those things are affordable that is a question for us to first determine and then announce on budget day.“

UK sales of whisky are 12% down since the escalator was introduced in 2008 and 21% lower than a decade ago. Over that period, Scotch Whisky’s share of the UK spirits market has fallen from 30% to 23%.

The alcohol duty escalator which goes up by inflation plus 2% each year was abolished for beer in the Chancellor’s last Budget

Tory leader Miss Davidson revealed she held talks with the Chancellor during a recent visit to Edinburgh to raise the issue.

She said: “He gets it.

“I think he was coming at it from a purely Scottish point of view and I wanted to remind him, in the most sweetly yet forceful terms, that I was actually coming at it also from a Conservative point of view that it is a pretty poor show if you’ve allowed tax and duty on a single product to get above 80% and that is what happens if the escalator is allowed to increase.”