Jeremy Hunt is coming under pressure to cut duty on whisky when he sets out his tax and spending plans next month.
While the Chancellor announced a freeze in duty last year, the industry is still reeling from a 10.1% hike introduced in 2023.
The Scotch Whisky Association (SWA) said that increased levy ultimately reduced revenue for the Treasury by around £100m.
Their analysis of HMRC tax receipts data found that duty revenue from spirits fell to £1.87 billion between August to the end of December.
This represents a year-on-year drop of 5%, costing the Treasury £98m.
There are now cross party calls for Mr Hunt to become only the fourth chancellor in history to cut duty.
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SWA Chief Executive Mark Kent told The Herald: “With just over three weeks to go until the Budget, the Scotch Whisky industry calls on the Chancellor to recognise that a cut to spirits duty makes clear economic sense.
“Jeremy Hunt has the chance to show the government’s support for an industry which creates jobs and investment, to back consumers and hospitality businesses, and boost growth.”
Mr Kent pointed to George Osborne’s 2% cut to duty on whisky and other spirits in 2015. He said that led to government revenue increasing by 4%.
He added: “Last year’s tax hike, the largest increase on the industry in 40 years, has reduced revenue.
“Cutting duty on Scotch Whisky is a win-win, and an opportunity the Chancellor should grab with both hands.”
Duty was also cut by Kenneth Clarke in the 90s and Anthony Barber in the early 70s.
Scottish Tory leader Douglas Ross, who recently met with the Chancellor, told The Herald that Mr Hunt was “well aware of the crucial importance of the whisky industry to Scotland’s economy, and to employment in my Moray constituency and across the country".
He added: "He’s also acutely aware of the importance of growth and competitiveness here, especially in the wake of the SNP’s failure to support Scottish business, income tax gap on employees, and its disastrous tax-and-axe budget.
“As I did before the Autumn statement, in which he provided a welcome freeze in duty, I made the case for continued support for the industry, as I will always continue to do.”
Lib Dem MP Alistair Carmichael, who served in the cabinet alongside Mr Osborne during the coalition years, urged the Chancellor to fight against the naysayers.
He said: “If Jeremy Hunt wants to be known as a tax cutting Chancellor then he can start by reversing his counterproductive tax hikes on Scotch whisky. Last year the Tories raised spirits duty and lost money in the process – a good summary of their economic incompetence in recent years.
“When I was in government we fought hard for against the naysayers and delivered a cut in spirits duty. It was a massive boost for the industry and increased the money coming into Treasury. That is what you can achieve when you have the political will.
“This is an industry that is of critical importance to some of the most economically fragile communities in the country. Distillers are a pillar for our economy in the Highlands and Islands – we need to support their growth, not drag them down with ever-higher taxes.”
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The SNP's Richard Thomson said he and his party fully supported the SWA call.
He added: "Some 73% of the price of a bottle of whisky is tax – a situation made worse by the Chancellor’s 10.1% duty increase levied in last year’s Spring budget.
“That high level of duty not only discriminates against whisky in home markets - it also makes it easier for other countries to justify similarly discriminatory taxation to favour their own domestic alcohol products in their markets.
“The Scotch whisky industry supports 10,000 jobs in Scotland; 42,000 jobs across the whole of the UK and represents 25% of total UK food and drink exports. It’s high time that the Chancellor looked to nurture this iconic Scottish industry and the employment and export revenues it provides by giving the industry a meaningful and long-overdue reduction in domestic duties.”
An HM Treasury spokesperson said: "We have fully backed the spirits sector by cutting or freezing their alcohol duty at the majority of fiscal events over the past decade - a 26% real terms tax cut worth £12.9 billion.
“As the Chancellor has said it is too early to know whether further reductions in tax will be affordable in the Budget.”
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