Britain gives Scotland whisky tax referendum sweetener

LONDON (AFP) - British finance minister George Osborne froze tax on Scottish whisky in his annual budget Wednesday, in an apparent attempt to woo Scots ahead of an independence referendum this year.

"Scottish whisky is a huge British success story. To support that industry, instead of raising duties on Scotch whisky and other spirits, I'm today going to freeze them," Osborne told parliament.

Tax on beer dropped by one pence but duty on other alcoholic products would rise in line with inflation, Osborne added.

Scots are due to vote on September 18 on whether to end the nation's more than 300-year-old union with England.

Along with North Sea oil and gas, the whisky industry is one of the twin pillars of the economic plan for independence drawn up by Scottish First Minister Alex Salmond.

But Osborne, an opponent of independence, warned in his budget that receipts from North Sea oil were due to drop by £3 billion (S$6.3 billion) in coming years.

"This is a reminder of how precarious the budget of an independent Scotland would be," he said. "Britain is better together." The government in London has increasingly reached out to Scots in a bid to keep the 300-year-old union between Scotland and England intact.

The whisky freeze comes just two months after the British government announced a series of measures to protect Scottish whisky, one of Britain's best-known products abroad.

The sector, ranging from peaty single malts to big brand blends, is worth £4 billion a year, according to the government, while the industry says it supports 35,000 jobs.

Salmond's Scottish National Party said it was pressure from the whisky industry that had made Osborne freeze duty.

It also said that nearly 80 per cent of the price of a bottle of Scotch whisky was still tax that went to the finance ministry in London.

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