Banning low cost booze

But the announcement means the Government has stopped short of setting a blanket minimum unit price for alcohol – such as 50p per unit – which would have pushed up the average price of all products.

It is understood officials were concerned such a move would run in to legal difficulties. Similar proposals in Scotland were dropped.

Well yes. For it would be against EU law to do so.

I\’ve really never understood all these campaigners for such a minimum price. They\’ve been told often enough that it would be illegal. So why do they still argue for it?

1) They\’re ignorant?

2) A much more depressing idea: knowing that they can never actually gain their goal they also realise that it\’s a great campaigning goal. So they can continue forever to campaign, be important, be given money, but never actually achieve the end which will make them redundant?

What really worries me I think is that as I age I\’m becoming less inclined to attribute attitudes or campaigns to reason 1) and more to reason 2). I didn\’t actually think it was possible for me to become more cynical about British politics but I seem to be managing it.

12 comments on “Banning low cost booze

  1. If there is a problem with particular shops/pubs encouraging drunkenness (by pricing or any other aspects of trade), local licensing authorities could always withdraw their licences.

    Best regards

  2. Rest assured that you aren’t nearly as cynical as the people who actually subscribe to 2. Imagine being one of these spokescretins, waking up at 4 in the morning to go on the Today Programme to argue for something you know you won’t get, and which you don’t even want, just for the cash.

  3. Pingback: Longrider » What Part of…

  4. I hope you’re correct on this, Tim, and I’ve heard it said (and read it) so many times that I’m happy to accept it as true – but do you have a clear citation for the precedent on this?

    I seem to recall some ECJ judgement on tobacco pricing. Is that the right case I’m thinking of, and is it definitely going to scupper the Coalition’s minimum pricing plan?

    I certainly hope so but I’m not yet fully convinced.

    Tim adds: Greek government on tobacco was the case. Gawain would be the person to ask for the direct link.

  5. I just don’t get the minimum price. If the government sets a duty on a type of alcohol then that is the minimum price, unless the retailer wants to run it as a loss leader which won’t last long.

    So set minimum duty at 50p per unit for all alcoholic beverages where it isn’t already at least as high and job done. Of course it raised prices for high prices drinks but I thought there was a budget deficit and sin taxes seem an acceptable way to help fill it, given you don’t have to drink.

  6. “Of course it raised prices for high prices drinks but I thought there was a budget deficit and sin taxes seem an acceptable way to help fill it, given you don’t have to drink.”

    The laffer curve still exists… just ask the Swedes, as described in this article (just one example I found in a couple of seconds of googling) http://www.cafebabel.co.uk/article/30957/sweden-alcohol-systemet-abstention-vodka-society.html

    BTW, I would argue that “sin taxes” are a notoriously bad idea just as any other moral laws, in the end it’s more or less the same thing as caning people for drinking (as is done in some countries).

    BTW2, the argument that lower prices and higher availability lead to more harm may not even be true (again the Swedish example): http://ije.oxfordjournals.org/content/early/2010/09/14/ije.dyq153.abstract

  7. OK – didn’t know it was illegal – but isn’t there a parallel with Carbon Tax,

    I’m a beginner at economics but there is a quantifiable amount of damage done by alcohol consumption e.g. http://www.nice.org.uk/newsroom/news/NICEcallsForMinimumPricingForAlcohol.jsp

    The bill for this is picked up by society as a whole. Therefore the cost of this should be included in the price of alcohol (I’ve no idea whether existing duty covers this cost)

    People can then choose to drink as long as they pay the costs associated with the damage done.

    I can see this is a bit simplistic as there is a ‘safe’ level of drinking which will be penalised – but I don’t know how you could cater for that.

    Tim adds: The carbon tax parallel is just fine: and so is taxing booze at whatever rate you want (current UK booze taxes more than pay for the damage).

    What is illegal is setting a minimum price.

  8. The externalities point of view – everything’s OK if the tax take on alcohol equals or exceeds the cost of alcohol-related damage – doesn’t seem fair on an individual basis to me.

    Why should the quiet-glass-of-wine-of-an-evening drinker be penalised through higher taxes at the same rate as the morons who binge drink and fight/urinate/puke in our town centres?

    It’s quite clear which type of drinker any one individual is, hence focus on the troublemakers and tax them, take away their freedoms – jail them if necessary – and leave the rest of us alone.

  9. I don’t think there’s any EU law banning selling at a loss, because it’s still French law that you can’t, and so another one would be otiose. Sales here are on set dates (officially set by the préfet, but actually by Paris).
    So a sort of resale price maintainance would be fine according to the law.
    As for whether supermarkets using booze as a loss leader is responsible for people behaving badly in pubs….

  10. Punitive drug taxation seems to have had the desired effect in the case of tobacco, particularly in respect to the over 40’s. Puritan campaigners believe it will work with alcohol. Sadly, the upcoming generation have a carefreee attitude to drugs generally and a tolerance of abusers not shared with their seniors.Alcohol used to excess is as insensitive to price as any other drug in the abusing section of the population.

  11. There is also an EU Directive that ties the government’s hand on alcohol duty on this in a bizarre way. The IFS:

    “The structure of alcohol taxes is governed by European Directives that mean it is not possible at present to tax the number of units directly for wine or cider, but it is possible for beer and spirits. Current implied taxes per unit are 17.3p for beer and 23.8p for spirits. However, a 75cl bottle of 9% strength wine is effectively taxed at 25.0p per unit whereas a bottle of 14% strength wine is taxed at only 16.1p per unit. It would be desirable to change this so that all alcohols could be taxed according to the number of units.”

    http://www.ifs.org.uk/pr/alcohol_prices.pdf

    “Why should the quiet-glass-of-wine-of-an-evening drinker be penalised through higher taxes at the same rate as the morons who binge drink and fight/urinate/puke in our town centres?”

    1. The first person may still be (knowingly or unknowingly) doing harm to their health for all they know. That has externalities which they should pay for if the science is there.

    2. Even if 1 isn’t true, it is better for the middle class drinker to pay a slightly higher cost in alcohol through the duty, than face even higher taxation through other taxes. The binge drinkers will be paying for most of the cost, whereas without alcohol duty, we all face the cost. In other words, while the ratio of externalities caused to alcohol drunk probably isn’t linear, alcohol duty will still take into account most of those externalities.

    “It’s quite clear which type of drinker any one individual is”

    Really? You don’t see any problems involving a sprawling bureaucracy, restictions on everyone’s liberties, and hayekian information difficulties?

    “and leave the rest of us alone”

    How exactly do you think a government could find out whether or not you’re a binge drinker AND leave you alone?

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