The economics think-tank the Institute for Fiscal Studies (IFS) have published a new report on Alcohol pricing and taxation policies. It echoes many of the findings from a report last year in which it suggested minimum pricing would transfer further profits to industry and retailers, therefore favouring increased taxation.
The new report however suggests the current alcohol taxation system is not optimal and a "sensible starting point would be to tax all alcohols at an equivalent rate per unit. Such a change would require policy action at the EU level which the Government should pursue."
On the forthcoming 'below-cost ban', the new report states:
'The ban on ‘below-cost’ sales is similarly a very small policy in terms of its likely overall impact. It introduces a de facto minimum price, which varies by alcohol type and strength... However, we estimate that it will affect only 1% of off-licence alcohol units, with virtually no impact on ciders (which have very low duty rates) or alcopops (which tend to be priced more highly per unit in any case).'
The report says a minimum price of 45 pence per unit 'would be a much more significant policy' but raises the question of how producers and retailers would respond:
"the behavioural responses [to minimum pricing] – including those of producers as well as consumers – will be hugely important... For example, how would the price of alcohol currently selling above the minimum change? How would the price of non-alcohol products change? What would happen to the available set of products?'
The IFS also suggests that a minimum price of 45 pence would affect the majority of off-sale consumers, and would affect poorer households as well as heavier drinkers. As a result of these factors and the likely increase in revenue to the industry, the IFS state they would
"...prefer higher and restructured alcohol taxes as an alternative to minimum pricing. At least with taxation the revenues flow to the Government rather than to the industry. Taxes that were more closely focused on the alcohol content of different products could also allow something closer to a minimum price to be introduced through the tax system, perhaps in tandem with a ban on below-tax sales."
However Dr Petra Meier, who conducted the University of Sheffield modelling on pricing impacts has previously said both taxes and minimum pricing should be used to reduce alcohol-related harm as it should not be an 'either or' argument.
Other reports relating to pricing include:
- Home Office report on The likely impacts of increasing alcohol price: a summary review of the evidence base [pdf]
- A SABMiller commissioned report by the CEBR outlining arguments against minimum pricing
- An Alcohol Insight into 'The Cost of Alcohol: The Advocacy for a Minimum Price per Unit in the UK'
- SNP pages on minimum pricing and the Scottish Alcohol Bill.
- An interim report on Manchester's proposed local minimum pricing
- BMJ report urging a VAT reduction for the on-trade
- Aberdeen University research arguing minum pricing does not target lower income groups