The Institute of Alcohol Studies (IAS) has released a new report advocating a rise in alcohol duties as the 2020 spring Budget approaches. Health groups have been repeatedly disappointed by previous budgets which have generally seen real term cuts favouring industry group calls.
The latest report though aims to debunk the seemingly intuitive claim that higher alcohol taxes disproportionately hurt the poorest. However, the report argues it is poorer groups who would see greater health benefits as a result of lower drinking and by receiving a greater share of any increase in public spending derived from increased revenue. The analysis, which calculated the amount of alcohol duty that different households paid as a share of their income and total spending, finds taxes account for a similar share of the incomes and budgets of rich and poor households alike, and at worst are only mildly regressive.
Aveek Bhattacharya, senior policy analyst at the Institute of Alcohol Studies, and the author of the report said:
'The single most effective way for the government to reduce harmful drinking is to make alcohol less cheap. Based on these findings, the Chancellor should not be put off increasing alcohol taxes in next month’s Budget out of concern for inequality. The cuts to alcohol duty he has inherited will cost the public purse £1.2 billion this year, money that would do much more to help the economically disadvantaged by being invested in public services. Gradually raising alcohol duty above inflation over the next 12 years could save 5,000 lives, with a disproportionate share coming from the most deprived households.'
The IAS have since highlighted a parliamentary question stating cutting/freezing duties has incurred £5.2bn of losses to the treasury since 2013-14, with the same amount again forecast by 2022-23. The IAS state the Laffer curve, which implies there is a point at which raising taxes reduces revenue, is therefore not currently relevant.
The Alcohol Health Alliance are encouraging the public to write to their MP to support duty rises to help address the continuing rise in alcohol harms. Some industry groups have been running public campaigns calling for duty cuts ahead of the March budget. Such campaigns often claim that duty cuts help businesses such as pubs, whilst others have counter-argued that beer duty cuts or freezes actually harm pubs because it widens the gap between supermarket and pub prices. During the duty escalator period of 2008-2013 (for beer) the gap between pub and supermarket beer prices appeared to have been halted, as put forward in a previous IAS affordability briefing [pdf] and seemingly supported by evidence on tax changes.
Meanwhile health groups also continue to push from minimum pricing for England as positive evidence emerges from Scotland and Wales gears up for implementation in March.
When it comes to alcohol taxation, who pays the tab? Watch the video summary of our report: https://t.co/AFqbF41DCB pic.twitter.com/aJ03DaU3LI
— IAS (@InstAlcStud) February 18, 2020
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