At tomorrow's meeting of European finance ministers in Brussels, the UK looks increasingly likely to succeed in setting a minimum excise duty that will leave the retail price of spirits in member countries unchanged.
Last year, the EC issued proposals for harmonising excise duties, which involved a minimum spirits tariff of 1,118.5 ecus ( pounds 804) a hectolitre (100 litres). In countries such as Spain, Portugal, Greece and Italy, where taxes on spirits are around E600 a hectolitre, that would have pushed up the price of Scotch by more than than pounds 2.50 a bottle. At the same time, wine would have been zero rated.
The blow to the UK would have been heavy, especially as these countries represent the fastest growing EC market for spirits. An alternative, which narrowly failed to clear the last Portuguese-chaired Ecofin meeting at the end of June, was for Scotch tariffs to be fixed at just under E600 - the same as Greece, the lowest tax currently charged in the Community.
With the UK now in the chair, however, the industry is convinced it will be able to push the matter through. However, Tony Tucker, spokesman for the Scotch Whisky Association, sounded a note of caution. 'This is the least worst scenario. At the moment governments may tax spirits more heavily than wine, but at least that is because they choose to do so. In future it will be the law. That's why it's so important we also get a clause to say the whole thing will be reviewed in a few years' time.'
Around 85 per cent of all the whisky produced in the UK is sold abroad, and spirits, with a value of pounds 1.8bn a year, are one of the country's biggest exports.
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