some default text...
Select Committee on Scottish Affairs Appendices to the Minutes of Evidence


Letter to the Committee from the Director of Government and Consumer Affairs, The Scotch Whisky Association (BEV 1D)


  1.  I refer to our telephone conversation in which you asked what the impact would be on the price of a bottle of Scotch Whisky if the duty on Scotch was to be charged at the wine rate. I thought it prudent to await the outcome of the Budget before replying.

  2.  There are a number of complications/assumptions that are required to be overcome in order to answer this question, but the short answer is £8.81 compared with—a price of £10.70 now. I hope the following explanation is sufficiently clear to lay out the reasoning behind the final answer.

  3.  The main obstacle to providing a quick and clean solution is that the present convoluted duty system lays down duty in a different fashion for spirits and wine. Spirits are assessed on the basis of £ per litre of pure alcohol, while wine is charged at £ per hectolitre of product.

  4.  With the present spirits rate of £19.56 per lpa, a bottle of Scotch Whisky at 40 per cent abv attracts duty of £5.48. By comparison all wine between 5.5 per cent and 15 per cent abv faces a duty rate of £154.37 per hectolitre, irrespective of the alcoholic strength within that abv range.

  5.  To make a meaningful calculation therefore it is necessary to (a) convert the wine rate to xp per cl of pure alcohol, which at the present rate of £154.37 per hectolitre is 13.78p. (To do this calculation we need to assume an alcohol strength for wine. I have selected 11.2 per cent abv as a pub serving at this strength contains the same amount of alcohol as a pub serving of Scotch Whisky); (b) compare the bottle price of Scotch based on this figure with the existing bottle price.

  6.  Thus, Scotch Whisky duty at the present wine rate is:13.78p x 40 per cent abv x 70cl (legal bottle size) = £3.87.

  This compares with £5.48 duty a bottle at present.

  7.  To make a true comparison between the current price and the "revised" (ie wine rate price) we also need to consider the impact of VAT, as this is levied on the excise duty element of the price as well as on the producers/retailer element.
Present duty rate per bottle £5.48
VAT on duty @ 17.5%0.96
Assume retail price£10.70
Less duty and VAT on duty6.44
4.26 includes VAT of
Total tax 7.07
Producer/retailer element 3.63
Price £10.70
"Revised" duty rate per bottle £3.87
VAT on producer/retailer element 4.55
Add 0.63
Total tax 5.18
Plus producer/retailer element 3.63
Price £8.81

  Thus, by applying the present wine rate to Scotch Whisky the price of a typical bottle comes down by £1.89.

  8.  Calculating the duty on all drinks at the same rate according to alcohol content is, as you will be aware from our submission, the only fair duty system.

  9.  I hope the above is helpful, but please do not hesitate to contact me if you require further information.

The Scotch Whisky Association

March 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 27 November 2001