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Call for £1 tax on Scotch sold at home

A tax should be levied on each bottle of whisky sold in Scotland so the industry's riches can be shared with the drink's country of origin, a former adviser to Alex Salmond has suggested.

A £1 per bottle tax could boost Holyrood coffers by at least £1 billion, said Professor John Kay, who served on the First Minister's council of economic advisers.

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

He said: "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 advisory council head Sir George Mathewson, who was previously chairman of the Royal Bank of Scotland, said a tax of 50p per bottle could lead to higher prices.

However, he said that "would not be a major percentage of the sales price".

"It would seem there's room there for something," he said. "I don't believe it (the industry) would be substantially harmed and I believe the success could be spread around a little more."

Diageo, headquartered in London and also listed on the New York Stock Exchange, is a leading player in the whisky industry.

The drinks giant's director in Scotland, Peter Lederer, said a new tax would send the wrong signals to those thinking of investing in Scotland.

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, said Scottish-made whisky is competing in tough international markets where it is up against other whiskies and spirits.

He said: "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."

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