Chancellor Raises Whisky Tax Again

[John]

In case any of you missed the news yesterday the Chancellor announced he will reduce VAT from 17.5% to 15% as a temporary measure in a attempt to boost the economy. But he has also raised the duty on whisky by 8% which he didnt announce as a temporary measure.

Despite Alistair Darling's decision to cut VAT, the 8% rise in duty on whisky would mean an extra 29p on an average 70cl bottle. Personally i would not be surprised if this move turns out to be permanent - the fall in VAT is only temporary.

This measure by Alistair Darling is supposed to boost the economy but i believe raising prices will only have an opposite effect on whisky sales.

John

[John]

The Scotch Whisky Associations response to the Whisky tax rise:

Responding to the Chancellor of the Exchequer's Pre-Budget Report today, the Chief Executive of The Scotch Whisky Association, Gavin Hewitt, said:

"Today's 8% excise duty rise is counterproductive and a damaging blow to Scotch Whisky in the UK, depressing consumer demand in a fragile market. The alcoholic drinks industry needs as much a boost as the rest of the economy.

"There is no logic to any duty increase. Alcohol revenues have already fallen by £40m this year on the back of the 9% excise rise in March. It disadvantages Scotch Whisky again at home and, possibly, overseas. The Treasury is likely to lose more revenue at a time when it needs every penny."?

After a 59p a bottle tax rise in March 2008, today's tax changes, taking account of the VAT reduction, will add another 29p on to a standard bottle of Scotch Whisky.

John

[Gregor]

This increase in spirit prices made no sense to me when i heard it yesterday, how on earth will it boost sales and help the economy. It just doesnt make sense and i also wouldnt be surprised if the increase is permanent.

Gregor

[Andy M]

Today it is being reported that the chancellor is revising his alcohol tax plans to prevent a increase in the cost of whisky.

Alistair Darling has ordered changes to the details of his pre-Budget report following an outcry from the whisky industry.

Mr Darling said the increase in duty on spirits was only supposed to offset the cost of his cut in VAT. He has ordered Treasury officials to change the plans.

In his pre-Budget statement, the chancellor announced an 8% rise in excise duty on spirits, which would see the tax on a bottle of whisky rise by 47p to £6.45.

It would be a huge blow to the chancellor's credibility if he is forced into a climbdown when the ink on the Pre-Budget Report is barely dry

This was on top of a 59p increase in March which John mentioned.

The BBC news website is saying that new legal documents will go before the UK parliament to amend the pre-Budget report and ensure the whisky industry is not hit for more tax.

Is this a back down or have we simply got a Chancellor who made a mistake because he cant count.

Andy M

[Charlie]

[Bookie]

If he did not want to alter the price of whisky would it not have been easier to reduce vat on everything except wines and spirits or is that just too simple.

Bookie

[Crane]

That makes sense Bookie but i suspect they dont do things which they did not mean to do and they did mean to raise the price and hope to sneak the changes through.

Crane

[John]

Alistair Darling has admitted to MPs that he made a mistake in raising duty on Scotch whisky, which would have led to a 29p rise in the price of a bottle.

His intention, he said, was to keep prices the same. Now the chancellor has admitted his mistake in the Commons and has tabled legal orders to negate the impact.

It is understood the original 8% increase in excise duty on spirits will be halved to 4%.

Mr Darling told the Commons: "I said on Monday that what I wanted to do was to make sure the level of taxation on alcohol and on cigarettes remained the same.

"So that broadly the reduction in VAT would be cancelled out by a change in duty.

"I think in relation to spirits what we announced on Monday didn't actually achieve that so I'm tabling a further order today to ensure that on spirits the duty there is at a slightly lower rate, which I think will hugely benefit the spirits industry wherever it is."

This is a very embarrassing u-turn for the chancellor which should have never been necessary but it is welcome news if it is going to bring the duty down to a slightly lower rare.

John

[Andy M]

I have just been sitting here enjoy a couple of Ardbegs and reading up on this fiasco. At least they have more or less sorted it out but what a complete joke it has made of Alistair Darling and the Treasury. If they could not get this right it does not hold very much hope for the rest of the economy.

I see now the government was landed with a fresh headache after beer and wine producers demanded a drop in their excise duty rates too.

Andy M