Sales of Scotch Whisky in the UK have fallen by one million bottles after UK finance minister Philip Hammond hiked spirits tax in his March Budget.
Official HMRC figures show 36.7 million bottles were released for UK sale in the first six months of 2017 — down from 37.7 million in the same period last year.
The 2.6% fall follows the UK chancellor’s decision to increase spirits duty in the spring Budget by an inflation-busting 3.9%, meaning tax now makes up 80% of the cost of a bottle of Scotch.
Of an average bottle sold at £12.77, more than £10 goes straight to the UK Treasury.
Scotch Whisky adds £5 billion annually to the UK economy and is worth more than £4 billion in exports.
Following the drop in domestic demand for Scotch, Hammond is being urged to cut excise duty on spirits to protect the UK’s leading food and drink export which supports 40,000 jobs.
The Scotch Whisky Association has launched a “Drop The Dram Duty” campaign calling on the chancellor to give fairer tax treatment to spirits in his November budget.
It comes after HMRC figures also show the tax take from spirits has actually fallen since Philip Hammond’s spring increase – meaning less money for the UK Treasury.
Spirits revenue was down more than 7% in the first financial quarter of 2017-18 to £697 million from £751 million in the same period from April to the end of June the previous year.
In contrast, a 2% cut in 2015 saw spirits revenue rise by 4% – giving a £124 million boost to the Treasury.
And a freeze in 2016 led to a revenue increase of more than 7%, pouring an additional £229 million into the chancellor’s coffers.
Karen Betts, Scotch Whisky Association chief executive, said: “Philip Hammond’s damaging 3.9% spirits duty hike has hit UK demand for Scotch and seen less money going to the Treasury.
“The Chancellor should use his November Budget to Drop The Dram Duty and boost a great British success story.
“Cutting tax would send a strong signal that the Government believes in a world-famous UK manufacturing industry which supports 40,000 jobs and plays a key role in Scotland’s economy.”
The UK is the fourth biggest market for Scotch.