To give some background to the drivers of the business of whisky production in Clackmannanshire and further afield, we relate some of the excise laws which applied during the formative years of the mechanised production of whisky.
Excise: Scottish Laws
Until the 17th century, taxation in Scotland was regarded as "an extraordinary source of revenue that was levied for a specific purpose such as the defence of the realm." However from the mid-1600s on, taxes became a more regular thing in Scotland.
In 1644 the Scottish Parliament passed an Excise Act fixing the duty at two shillings and eight pence (13p) per pint of 'aqua vitae' or other
strong liquor - the Scots pint being around one third of a gallon - the duty to be paid on "everie pynt of aquavytie or strong watteris sold
within the countrey."
The tax was taken from the producers. This new tax caused many of the producers to operate illicitly, a trend that continued for almost 200 years.
For the remainder of the 17th century various alterations were made to the types and amounts of duty collected, however there remained few legally operating distilleries.
The original Ferintosh Distillery on the Black Isle near Inverness was the first legally operating distillery to produce on a commercial scale. It was able to do so because its owner had been granted a tax exemption for his support of William Ill, William of Orange, who took to the throne in London in 1689. It was noted in 1689 as being of a larger scale than the typical cottage industry distilleries then common. This distillery closed in 1785, following the UK 'Wash Act' of 1784, when the Ferintosh exemption was also revoked after around 95 years in place.
Excise: British Laws
Following the union of the Scottish and English parliaments in 1707, efforts were made to begin harmonising the tax regimes in England,
Wales, and Scotland. However this process was not without its own problems and anomalies. The Scottish populace were unused to so
many taxes and railed against their introduction.
In England, malt was first taxed in 1644 by the Crown to help finance the English Civil War. Article 14 of the Acts of Union 1707 between England and Scotland agreed that the malt tax would not be applicable in Scotland until the conclusion of the 1701-1714 War of the Spanish Succession.
After the Peace of Utrecht in April 1713, Parliament voted to extend the tax to Scotland, despite protests from the 45 Scots Members of Parliament, who reflected the general discontent on the impact of Union.
At a meeting with Queen Anne on the 26th of May, 1713, a deputation that included the Earl of Mar (then the Secretary of State for Scotland) and the Duke of Argyll, asked her to dissolve the Union, but she refused this request. However the Malt Tax extension was quietly shelved.
From 1720 moves were made again to harmonise British taxes, and in 1725, the House of Commons introduced a new malt tax which applied throughout Great Britain, but, due to the state of the local economy, this was to be charged at only half the rate in Scotland.
In June 1725 the Malt Riots started in Hamilton and quickly spread throughout Scotland. The Lord Advocate, Robert Dundas, an opponent of the imposition of the malt tax on Scotland, published an anti-malt tax pamphlet and was sacked. General Wade was appointed to quell the protests and as a result several rioters were killed or transported. However, the British government was forced to make concessions.
The 1729 Gin Act
Gin consumption in the United Kingdom had rocketed during the late 17th and early 18th centuries during the 'Gin Craze'. As consumption continued to grow, gin began to be blamed for a variety of social issues including crime, prostitution and mental illness.
The government felt compelled to legislate. The 1729 Gin Act was intended to restrict gin sales by increasing the duty on its sale and raising retail licensing fees. One major and unintended flaw in the act was that it defined gin as spirits to which "juniper berries, or other fruit, spices or ingredients" had been added. This definition of 'Gin', allowed the act to be bypassed by not adding these ingredients.
The resulting product was widely known as 'Parliamentary Brandy'. For those that still made proper gin, the tax was set at five shillings per
gallon and gin retailers were required to purchase a £20 annual license.
1736 Gin Act
The Spirit Duties Act 1735, more commonly known as the Gin Act 1736, established a twenty shilling per gallon tax on gin and £50 annual licenses for gin retailers.
The new tax rate proved immensely unpopular and provoked public rioting in London. After just a year enforcement of this new law became untenable. It is said that only two annual licenses were ever purchased. Illicit spirits became widespread as people produced their own products.
1743 Gin Act
The Spirits Act 1742, more commonly known as the Gin Act 1743, repealed the Gin Act 1736 in favour of lower taxes and licence fees. The Gin Act 1743 reduced the cost of an annual gin-selling license from £50 to just twenty shillings. The tax on gin producers and penalties for violating the law were also significantly reduced.
1751 Gin Act
The Tippling Act 1751, more commonly known as the Gin Act 1751, regulated the distilling of 'Spirituous Liquors', but also specifically gin. The reason for the passing of the Act is described below:
'the immoderate drinking of distilled spirituous liquors by persons of the meanest and lowest sort, hath of late years increased, to the great detriment of the health and morals of the common people; and the same hath in measure been owing to the number of persons who have obtained licenses to retail the same, under pretence of being distillers, and of those who have presumed to retail the same without licence, most especially in the Cities of London and Westminster, the the Borough of Southwark and other places ...'
The Act imposed a £5 annual licence that distillers would have to purchase. An additional clause in the Act meant that distillers would not be able to sell their liquor directly to customers nor could any liquor be consumed on their premises. After the passing of this Act the number of gin shops in London was greatly reduced. Although there are stories of illicit gin still being readily available. If people were found to be in violation of the Act they could be fined up to £10, sentenced to three months hard labour or transported to 'any of His Majesty's Plantations' for up to seven years.
The Gin Acts were a foreshadowing of what was to come...
Market growth for Scottish distillers continued up until 1752, with the annual output almost doubling in the space of ten years. Things were going well until in 1757, a massive crop failure forced the British government to prohibit the sale of distilled spirits for three years.
However the use of a private still was not forbidden as long as the product was not sold. This prompted a huge rise in illicit distilling and smuggling. By the time the ban was lifted it was already embedded as a part of the social fabric, and proved, in the highlands at least,
very difficult to stamp out.
Legal distilleries were now having to compete on price with both the Duty-free Ferintosh distillery, as well as the illicit operations that also weren't paying any tax. Many of them reacted in the only way that they could, and took measures to fake their Customs and Excise production declarations in an attempt to reduce their tax bill. This was reciprocated by new government measures that aimed to control the few remaining legitimate operations.
The Wash Act 1784
Instead of taxing the low wines and the spirit separately as previously, The Wash Act levied a charge for each gallon of wash produced, estimating the conversion rate to spirits after distilling. The industry had advised upon this conversion rate. The tax was based on the assumption that five gallons of wash produced one gallon of spirit.
The Wash Act of 1784 lowered duties in England and Scotland. In the Lowland area the fermented wash was now taxed in contrast to the Highlands, where the tax was on still capacity. In return Highland distillers were granted a more lenient tax regime. Legal stills of a maximum of 30 gallons were permitted. One catch was that they were not allowed to sell their whisky outside of the Highland area. The Wash Act drew an imaginary line across Scotland which immediately cut some markets off for Highland whisky, which in many cases reverted to smuggling to continue to service their customers.
The Highland / Lowland divide
This imaginary line delineating Highland and Lowland whisky areas ran from Dumbarton to just north of Stirling, then followed the southern face of the Ochil hills through Clackmannanshire before heading east to the south of Muckhart, and then turning northeast to the south bank of the Tay near Perth. From there it followed the south bank of the Tay east to the North Sea.
Since the lowland distilleries were much more closely observed by excise officials, a consequence of the Wash Act was an enormous increase of legal production in the Lowlands, in an effort to try to make the business profitable. All of the excess production could not be sold within lowland Scotland however, and as a result the majority of the produced spirit was exported to England, mainly for rectification and addition to gin. This influx of cheap spirit caused alarm with the London gin distillers, and as a result of their pressure, the Government passed the Scotch Distillery Act in 1786.
The Scotch Distillery Act, 1786.
This Act now allowed two Highland distilleries per parish, but restricted the consumption of grain used to 25 ton per annum per distillery and increased the maximum size of the still from 30 to 40 gallons. Duty was slightly increased to £1. 10s. 0d. per gallon capacity.
In the Lowland area the Act abolished the tax on wash and applied the highland system of taxing on still capacity, though at a higher rate of £2. 10s per gallon.
Stills were to be licensed on their expected annual capability, based on the assumption that a still could only be discharged around seven times per week. The Lowland distillers had to find a way to level the playing field a bit, and efforts were made to speed up the rate of distillation. The Steins developed shallower and broader stills that could be discharged much more quickly. Still stirring was used to try to prevent the burning of the wash as it was heated, and also the stills were filled partially into the neck which was not considered a part of the still's taxable volume.
Regarding faster still discharging, it was alleged by the Lord Commissioners of the Treasury that the Scottish distillers had "by the ingenuity of their contrivances, found means to discharge their stills upwards of forty times a week". However at John Stein's Canonmills Distillery in Edinburgh, it was rumoured that they could fill and discharge the wash still at least four times per hour. As a result of this rapid distillation, lowland whisky gained a poor reputation regarding flavour and general quality, but it was produced at allow enough price to still attract buyers, and in any case much of it was being exported for rectification into gin.
However the Act also imposed an extra duty on spirit being exported to England. This increase in duty made it much harder for the Scottish distillers to operate in the English market, although some (including the Steins) did continue to send shipments, which still managed to account for a quarter of the English market in 1786.
This enraged the English distillers, and under pressure from the London gin lobby, the Lowland Licence Act was passed in 1788.
The Lowland Licence Act 1788
This Act, required Scottish distillers who wished to operate within the English market to give 12 months notice of their intentions. This forced the existing distillers who were already participating in the market to exit abruptly and try to seek other markets. In addition, the distilleries were required to work from wash stills of at least 200 gallons and spirit stills of at least 50 gallons, and the duty on any spirits exported to England rose once again.
Part of the aim of the excise changes in the 1780s was to stamp out illicit distilling. However smuggling flourished as never before. A radical overhaul of the Excise laws followed between 1814 and 1823.
1823 Excise Act
Following an 1822 Royal Commission, the Excise Act of 1823 set legal distilling at a duty of 2/3d (12p) per gallon for stills with a capacity of 40 gallons or more. There was an annual licence fee of £10 and no stills under the legal limit were allowed. The act also reduced the excise on whisky to 2s. 5d. per gallon of finished whisky. The first licensed distillery under this scheme came into 'official' existence in the following year and thereafter many more distillers moved to legal production.
In 1840, the duty rate was around five pence per bottle. By 1914 this had nearly doubled to nine pence. Just 20 years later it had risen to 48
pence. Duty has generally risen since then.
In 1858 the duty and distillery regulations were finally harmonised throughout Britain.
A Royal Commission formed in 1908 decided that only grain and malt whisky produced in Scotland, or a blend of both, could be called Scotch whisky. This was possibly the most important decision in the industry's history, in part protecting scotch whisky from foreign competition.
The Immature Spirits Act, 1915
This Act made it illegal to sell any whisky of less than two years old, which increased to three years just a year later. The object of this Act was to restrict the amount of alcohol available as it was being blamed for the poor quality of shells being supplied to armed forces during World War l, however the actual cause of this was in fact poor quality control at the munitions factories.
In 1973 the price of a bottle of whisky, inclusive of excise duty, became subject to Value Added Tax (V.A.T.), a UK sales tax.
The 1973 VAT rate was 10%. In 2023 it was 20%.