By Marcin Miller

From the Editor

In Issue 20, Pip Hills argued, with some passion, the case for Scotch being a cultural product. Surely the government will be doing whatever it can to support and energise the industry? At the time of writing, The Scottish Affairs Select Committee has issued a report calling for ‘the end of tax discrimination against Scotch whisky.’ Well, about time. According to Hugh Morison, Chief Executive of The Scotch Whisky Association, ‘the Committee has recognised that there is no logical basis for the higher tax imposed on Scotch’. For our overseas readers I will reiterate the current taxation system in the UK: whisky is taxed one-and-a-half times more than wine. That’s right. Britain’s fifth biggest export is discriminated against in the domestic market and, with delicious British bureaucratic irony, we offer a competitive advantage to imports! I believe that is what is known as adding insult to injury. Can you imagine a situation where, for example, the French were to tax imported wine at a lower rate than domestic produce? Imagine the public outcry if German motorists were to face higher rates of tax to buy BMWs rather than imported marques.Were this discrimination to end, the report predicts the consumption of spirits would increase relative to wine. ‘This would have a positive impact on the Scottish economy and … could be achieved at little cost to the Exchequer.’ So far so good. Hugh Morison again: ‘Nevertheless, under the Committee’s recommendations full tax equality will take 16 years to achieve.’ The SWA will, therefore, continue to lobby for duty cuts. They are after a 4% year-on-year reduction: if they are successful, it will still take eight years before you and I pay the same tax on a pub measure of whisky as we do on the same amount of alcohol served as wine. Sadly, the chances of success are slim, given that whisky remains a relatively soft taxation target.I trust I speak for every reader of Whisky Magazine when I say that, despite the illogical nature of this situation (and notwithstanding my personal penny-pinching nature), I will continue to derive greater pleasure from whisky than wine – even if it does cost over eight pence more for an equivalent fix of alcohol. This is not to discourage the SWA. Quite the opposite: The Scotch Whisky Association needs the support of consumers to continue in their noble quest against the red tape. I suppose 16 years is really not that long bearing in mind the history of Scotch goes back over 500 years. It is not an insignificant period of time for lovers of Lagavulin, but it is a lot of drams at over the odds for you and I.Just when you were thinking that this is progress and the future is rosy for us, with the prospect of cheaper whisky by 2018, along comes the Treasury with a brilliant new idea. At the same time that the Committee’s support for abolishing discrimination was announced, the Treasury announced plans to introduce further discrimination against spirits. A consultation exercise is to take place with a view to examining the introduction of tax stamps on spirits but not on wine or beer. Tax stamps are those little strips you see on the necks of whisky bottles when you go on holiday. They are perceived as being an easily identifiable way of assessing whether duty has been paid or not. Is this progress? No. Countries such as the USA and Greece have recently given up this archaic form of identification, presumably as it is not an effective fraud deterrent. If tax stamps are introduced producers costs will be increased by having to carry additional stock lines for the UK market only. High speed bottling lines will become less efficient. If, as is entirely possible, the £5.50 for each stamp is payable upfront it will have a very significant effect on the smaller companies involved. If these proposals go ahead, who will meet the cost implications? Not consumers: retailers won’t allow that to happen. Distillers already absorb margins in retailer-led cut-price promotions. When costs go up, the viability of releasing fine and rare whiskies (which are inherently bottled in tiny quantities) for the UK market may well diminish altogether. The very idea makes a mockery of the much-vaunted single European market. Landlord, make mine a double.