Monday, 3 December 2012

Levelling the playing field

If alcohol was suddenly discovered then (assuming it wasn’t immediately banned) it would almost be certainly be taxed at a uniform rate depending on the amount of the alcohol in the drink. However, in practice we have a confusing and somewhat inconsistent system of alcohol duties, with different regimes applying to cider, beer, wine, and spirits, and some drinks taxed at a flat rate while others are pro rata to the alcohol content.

There is some point to this, though, as broadly speaking weaker drinks are taxed less heavily than stronger ones, Partly this is to reflect the higher production and distribution costs and also, as I said here, while it is invidious to claim that one form of alcohol is “better” than another, it is less like hard work to abuse spirits and therefore there is a case for the tax system sending a message that they need to be treated with a certain amount of respect. It’s important to remember that Hogarth contrasted the squalor of Gin Lane with the prosperity of Beer Street – the former was certainly not making a general point about the evils of drink

This is a distinction that will be seriously undermined by minimum pricing, as pointed out in this blog post by Damian McBride which was mentioned by Phil of Oh Good Ale. Yes, it is that Damian McBride, Gordon Brown’s disgraced spin doctor, but he does have a background of working in the Treasury on alcohol duties and on this subject does seem to have some idea what he is talking about. Under minimum pricing, at the lower end of the market all drinks will sell at the same price per unit of alcohol, regardless of duty, thus giving a relative boost to spirits at the expense of beer and cider, maybe not quite what the anti-drink lobby are hoping to achieve.

(He’s wrong about Buckfast though – my understanding is that it generally retails for well above 45p/unit anyway, and its main appeal is not so much cheapness as its high caffeine content).

McBride makes another good point here that minimum pricing would in practice be difficult to enforce and would tend to favour the outlets that are often least controlled and responsibly run, namely small corner shops, again not perhaps the consequence sought by the anti-drink lobby.

6 comments:

Steve Lamond said...

I'm not sure what you mean by relative boost, as all drinks will have the same minimum price per unit, yes single measures of spirits could be cheaper but a pint does have more alcohol than a single measure a 4% pint is equivalent to a double in terms of numbers of units (well even more in fact as its 568ml). The prices of everything under the minimum will rise to the minimum, but spirits prices may rise more overall as they tend to be cheaper per unit than beers in the off-trade in any case, which will serve to make beer look cheaper in comparison (lower price rise).

Damian said...

Just to clarify the point about Buckfast, what I'm assuming is that - if the 45p minimum price was enforced by taxation alone - that would mean such a huge hike in the tax paid per unit of alcohol on a bottle of Buckfast, that either the retail price would have to rise significantly to keep the manufacturers' profits at their current level, or it would simply cease to exist. Maybe no great loss where Buckfast is concerned, but the same could easily happen to Cider. If the 45p per unit minimum is enforced as proposed in the MUP consultation document - which I maintain is impossible - then I agree Buckfast will hardly be affected, which rather defeats the purpose of the MUP! Cheers!

Curmudgeon said...

It would also greatly increase the price of sherry, which falls into the same duty category as Buckfast, thus depriving many old ladies of one of their few pleasures in life...

Cooking Lager said...

I thought you were one of there few remaining pleasures in life for old ladies, Mudge.

Oh what a strange coalition is forming against toff Daves plan to stop the poor from drinking.

The nasty piece of work that is McBride who quit over spreading lies about peoples sex lives lining up with the fruitcakes of UKIP. I don't like minimum pricing but I like the some of those campaigning against it less.

I'd pay a quid a unit for grog if it meant scuttlebutts like McBride crawling back into the woodwork.

Jonathan Bagley said...

Can anyone, perhaps Damian, answer the following?

If £3.59 wine goes up to £4.22, what will be the new price of £3.99, £4.49, £4.99, £5.49, £5.99, etc. wine?

JJ said...

Isn't Damian McBride one of the characters minimum pricing is designed to deal with?