Cheap Booze

This chart of tax paid on booze in supermarkets is instructive:

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Shows you quite how much is already gouged out of you when you try to partake of one of the pleasures of life. But even more instructive is this:

Safe drinking campaigners say it is impossible for supermarkets to make any profit on a £20 bottle of vodka, if 88 per cent of the sale price is being passed straight to the Treasury through VAT and duty.

I don\’t see why it\’s impossible for them to make a profit on such: Morrison\’s has £1,17 to play with on that bottle of Smirnoff. But let\’s go further and accept that it is in fact true, that they\’re not making a profit, that they are selling at cost.

That\’s actually what we want, isn\’t it? If you look at the classical economic models what happens in a perfectly competetive market is that competition forces profit margins down to zero. To the benefit of the consumer, of course. That the supermarkets are selling things at cost shows that, in this sector of the market at least, that we do indeed have something close to perfect competition and that the consumer is thus benefiting.

A cause for celebration, surely? So, who has the best deal on bubbly?

6 comments on “Cheap Booze

  1. Is there a case for competition between duty & tax-levying governments in the EU then? Shouldn’t I be able to buy my booze in the cheapest state and ship it to the UK? Have I found a gap in the alleged single market? Is tax harmonization merely another way of describing an anti-competitive price fixing cartel? Can I vote to leave now?

  2. The supermarkets should starting printing on the receipts just how much the punter has paid to Gordon Brown. And on your Club Card statement it ought to indicate the total for the year. We might see these stories of “cheap alcohol” treated with the disdain they deserve.

    “Shouldn’t I be able to buy my booze in the cheapest state and ship it to the UK?”

    That was the intention of the 1992 single market treaty. UK C&E never accepted it (despite the law being clear at the time) and impounded shipments. The council of ministers agreed a change and carved out alcohol as a special arrangement disallowing agents to import on your behalf.

    “Is tax harmonization merely another way of describing an anti-competitive price fixing cartel?”

    Yes.

    “Can I vote to leave now?”

    Apparently not.

    But you can rent a white van and drive to France and load up. The courts have slowly been tightening the noose on the Government and HMRC on what they can and can’t stop you doing.

  3. Heavens, I knew it was a lot but I didn’t know it was that much. Shows you the difference in value between the State and the supermarkets where one can give you a convenient and pleasant drink at 25% of the price and the other can’t do fuck all effectively with the remaining 75%.

  4. But let’s go further and accept that it is in fact true, that they’re not making a profit, that they are selling at cost.

    But they won’t be, will they? Because the Dour Cyclopic Twat is taking by far the lion’s share. So they aren’t really selling at cost- ergo, we aren’t getting it at cost.

  5. Actually, economics dictates that in perfect competition, there will be no profit once opportunity costs are taken into account. In this case there would likely have to be some accounting profit in order to compensate for the opportunity costs.

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