Expert calls for whisky bottle tax

Whisky in a glassA tax should be levied on each bottle of whisky sold to share the industry's riches with the drink's country of origin, economic experts have suggested.

A £1 per bottle tax could boost Holyrood coffers by at least £1 billion, said Professor John Kay, who has served as a government adviser.

Prof Kay said the benefits going to Scotland from recent export success, notably to emerging markets in South America and Africa, had been "disappointing".

The claim is made on BBC One Scotland programme Scotched Earth. The whisky industry is reckoned to be worth £5 billion when the produce leaves distilleries. About £500 million is spent on paying around 11,000 employees and supplies are estimated to cost around £1.5 billion. That leaves a £3 billion profit.

A tax would not lead to a drop in demand if distillers absorbed the extra cost instead of passing it onto drinkers, said Prof Kay, who served on the Council of Economic Advisers appointed by First Minister Alex Salmond.

He told the programme: "I think the benefits to Scotland from the whisky industry are really quite disappointing. The largest producers are not based in Scotland. Their profits go mostly to people who are not resident in Scotland. They don't pay much tax in Scotland and we don't think they pay much tax in the UK."

Former council head Sir George Mathewson, previously chairman of the Royal Bank of Scotland, said a tax of 50p per bottle could lead to higher prices but argued that "would not be a major percentage of the sales price".

Diageo, headquartered in London and also listed on the New York stock exchange, is a leading player in the whisky industry. Its director in Scotland, Peter Lederer, said a new tax would send the wrong signals to those thinking of investing in the Scottish economy.

He said: "If the argument in an economy is to take a successful business and keep taxing it because it's successful, (that) gives the wrong impression."

Gavin Hewitt, chief executive of the Scotch Whisky Association, told the programme: "I cannot see why any government would apply a production tax which would make Scotch whisky less competitive overseas against other drinks which are cheaper to produce and cheaper to sell."
Read Full Story