Distiller and brewer attack 'unfair' taxes

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The Independent Online
TWO separate attacks on UK taxes on spirits and beer were made yesterday by Highland Distilleries, the whisky producer, and Shepherd Neame, the brewer.

Both companies were announcing annual results and expressed concern about the 'unfair' tax differentials between the UK and other EC member states.

Highland distils Famous Grouse, the second biggest selling standard blend in the UK. John Goodwin, its chairman, said: 'The attitude of the Government leaves something to be desired.

'Completely insufficient attention has been paid to (tax). The 1993 Budget should signal the start of reducing the differential between British spirits and wine.'

UK duty per centilitre of pure alcohol for whisky is nearly 20p, almost twice the 10.5p levied on imported wine. Excise duty plus VAT on a bottle of Famous Grouse is pounds 7.28p - 62 per cent of the retail price of pounds 11.69.

The company's turnover, net of duty, rose by 5 per cent in the year to 31 August, and pre-tax profits improved 2 per cent to pounds 28.7m after being down a similar amount at the halfway stage.

The final dividend is up 10 per cent to 4.55p.

Highland is more exposed to the UK tax regime than most other whisky companies, because only a third of its production is exported, compared with the industry average of 86 per cent.

'There is effectively a wine subsidy to encourage imports,' Mr Goodwin said.

While the provisional agreement in July between the EC's finance ministers lifted the threat of tax-induced price increases on spirits across the Community, the whisky industry said it was still heavily discriminated against.

Meanwhile, Shepherd Neame is more concerned about the threat of personal imports of cheap beer from France, where duty is 25 times less than the UK, into its Kent stamping ground.

Robert Neame, chairman, said: 'This was unfair competition with legitimate UK businesses that have paid UK duty. The Government must recognise that it will suffer increasing revenue losses until duty rates are harmonised with the rest of the EC.'

Shepherd, whose shares are unquoted but dealt with on a matched bargain basis, lifted taxable profits from pounds 3.7m to pounds 4m in the year to 27 June. The figures reflected the benefits of pub acquisitions.