28 September 2010
Alcohol taxation should be restructured to correspond with alcohol strength, the Institute for Fiscal Studies says today.
Such a change would not only have the same effect as a minimum-pricing regime for alcohol, but would also ensure the revenue generated would be passed to the government rather than to the drinks industry.
IFS researchers found that the alternative – setting a minimum price of 45p per unit of alcohol – would hand some £700m to drinks manufacturers and retailers, particularly the big supermarket chains.
The largest beneficiaries would be the supermarkets that sell the most alcohol – Tesco, Asda and Sainsburys – and those that sell it most cheaply – Aldi, Lidl and Netto.
Andrew Leicester, senior research economist at the IFS, said: ‘Minimum alcohol prices would transfer large sums from consumers to those firms that retail and produce alcohol, but may target households that consume the most alcohol more directly than increases in alcohol taxes.
‘However, higher taxes would generate much-needed revenue. The government should seek to change European regulations on how alcohol taxes can be structured, so that taxes can mimic the impact of minimum prices whilst ensuring the resulting revenues go to the government and not firms.’
The research reveals that 85% of alcohol sold in supermarkets and off licences in 2007 sold for less than 45p per unit. This included 91% of lager units, 90% of cider units and 87% of spirits units.
Low-income households – those on less than £10,000 a year – bought cheaper drinks than wealthy ones, as did households that buy a lot of alcohol.
In Scotland, the Scottish National Party minority government favours the introduction of a minimum price for alcohol of 45p per unit. But plans to introduce it were recently removed from the Alcohol Bill by a group of opposition MSPs.
