What is it with minimum pricing?

How have we ended up with such a near criminally stupid public policy?

Scotch whisky producers are planning to protest to the European Commission over proposals to set a minimum price per unit of alcohol in the UK.

Leave the illegality aside for one moment: my understanding is that it is illegal and will end up being struck down. But as I say, leave that aside. The much more important question is how did we end up with such a goddam fucking stupid piece of public policy?

No, even if we accept the nonsense that is being spouted about alcohol consumption it\’s still a fucking stupid policy.

Binge drinking is falling, alcohol consumption is falling…..but we\’ll even leave those real world facts aside.

Assume the woo merchants are correct. Too much booze is being drunk because booze is too cheap. So, we wish to make booze more expensive. How are we to do this?

1) Raise the tax upon booze. This raises the price of booze. Job done. Interesting side effect, it increases tax revenue so that we can pay for nurses, bombs, duck ponds and other essentials of democratic government.

2) Impose minimum prices. This raise the price of booze. Job done. The extra cash fattens the profit margins of the booze manufacturers.

In what parody of a sensible universe do the political classes of an entire fucking nation choose option fucking two?

I\’m sorry but I really do not understand this. I just do not understand how all these arts and PPE graduates have regressed to the economic intelligence of a tapeworm. Can someone explain this to me? What is the justification for minimum prices over a booze duty rise?

What the fucking fuck is going on here?

20 thoughts on “What is it with minimum pricing?”

  1. Because raising the tax would give the Labour party ammunition – “see, the other mob raise them too!”

  2. Offshore Observer

    In think it is probably the belief that if you raise the tax on booze, the nasty horrible mega supermarkets like tesco etc simply absorb the tax and offer deep discounts on home brand alcholol negating the impact of tax rises.

    A minimum price prevents that type of discounting thus putting an absolute floor on the price that can be offerred for sale.

    I don’t see why you don’t have a combination of the two. A tax of say 50p per unit with a minium price of 50p per unit.

    Nevertheless I always knew that once the do-gooders stopped everyone enjoying a cigarette they would focus on some other “evil” to campaign against.

    You can have my pint when you can pry it from my cold dead hands!

  3. Corruption? Just a guess. Producers will not benefit from minimum prices, they will continue to be screwed down by the supermarkets and retailers.

    Supermarkets though, stand to make a fair bit from this. Standard “smoke-filled rooms” stuff, except the rooms probably aren’t filled with smoke any more…

    This threat is probably a shakedown by the producers – “share the baksheesh or else”.

  4. It’s simple – if they increase duty on booze, then the nice booze they buy for themselves gets more expensive, but the minimum price means that the plebs pay more for booze, but the pols don’t.

  5. I’ve always got the impression that it was seen as a way to make booze more expensive in supermarkets, without provoking a huge backlash from pub operators.

  6. What Richard and Paul say. A minimum price eliminates the undrinkable two-litre plastic bottles of supermarket cider; but the middle classes don’t have to pay extra for that bottle of wine in the restaurant. Drinking in licensed venues is unaffected, while street and home drinking are curtailed.

    It may not be the best policy, but I’m glad the Scottish government has the freedom to experiment with things like this. Free markets are good; devolution gives us a free(r) market in law-making.

  7. I am with Ben – corruption. Someone is going to get a good job when they leave politics as a result of this.

  8. “The minimum price eliminates the undrinkable two-litre plastic bottles of supermarket cider; but the middle classes don’t have to pay extra for that bottle of wine in the restaurant.”

    You’re not wrong, but it’s still a stupid way of going about it. The two-litre bottle of supermarket cider is so cheap because cider is taxed far lower than any other kind of booze per unit of alcohol, I think originally because nobody wanted to lose the yokel vote.

    A move to a system where all booze is taxed solely on ABV would meet all the “stopping people from getting wasted on cheap sherry and cider” objectives that people seem concerned about at present, and make life simpler and fairer.

    Caedmon also has a point, at least for some values of “small”. Diageo and Pernod are the leading branded manufacturers, and they don’t sell anything that’d come in below the proposed minimum prices.

    There are also high volume, low margin producers like Glen Catrell (Glen’s Vodka, assorted unpleasant Scotches, several supermarket brands) who sell things way below the proposed minimum prices. They don’t have multi-million pound PR and lobbying budgets, nor are they able to represent themselves as loved brands and export ambassadors.

    So without any actual cash-in-hand corruption, the system will *tend* to favour the aims of the branded producers. Which, quite.

  9. *A move to a system where all booze is taxed solely on ABV would meet all the “stopping people from getting wasted on cheap sherry and cider” objectives that people seem concerned about at present, and make life simpler and fairer.*

    I don’t have much money.

    I drink a few pints at the weekend, of those cheap ciders.

    These people can go fuck themselves with a rusty pole.

  10. If you mean pints-in-a-pub, it makes no odds, the tax is a tiny fraction of the price.

    If you mean pints-at-home, then under a sensible ABV-based system you wouldn’t have to drink rancid cider, you could drink anything of the relevant strength. I mean, it’s not like continental lager’s expensive in the UK, at six for a fiver…

  11. Sorry John B, if you think tax in the pub is a tiny fraction of the price you should try running a pub. The amount of a pub’s turnover which is devoured by the state is astronomical when you take into account VAT, duty, business rates, Nat. Insurance, employee PAYE, licencing and environmental charges, insurance premium tax etc etc etc etc

  12. David C, in the context it’s very clear that I’m talking about duty, which is indeed a tiny fraction of the price (from memory, about 40p on a pint of beer). Of course, as with any retail business, wider taxes are an important part of the cost base.

  13. john b, according to CAMRA, beer at £3 per pint is subject to duty of 55.4p and VAT of 50p, totalling 105.4p. They calculate this to be a total tax take of 35.1%.

    This last calculation is incorrect, of course; the tax represents 35.1% of the bar price, but 54% of the pre-tax price. (This is the same logic as saying that £1 worth of petrol, of which 75p is tax, carries a 75% tax rate; the true rate, in that scenario, is 300%.)

  14. Simon: the 50p a unit is the proposed Scottish minimum pricing, nowt to do with tax. Ian’s kindly looked up the correct figure, which is slightly larger than I’d remembered (but still well below the proposed minimum price).

    Ian: the only tax which is relevant to pubs specifically is the duty and the VAT on the duty, which is 66.5p all in (I’ll call that ‘effective duty’). The rest of the tax take is just VAT on the product, for which pubs are in exactly the same situation as any other business.

    I’m shocked that the average price of a pint is as low as GBP3, but the BBPA data seems to more or less agree so let’s run with that – in which case, effective duty makes up 22% of the retail price of pub beer.

    Meanwhile, the effective duty on a six-pack of supermarket lager is GBP3.50, and the retail price is GBP5, so duty makes up 70% of the retail price.

    This is why I don’t have much time for pub industry folk claiming that they get screwed by beer duty. They don’t, they get screwed by the fact that running a labour-intensive hospitality business is a hell of a lot more expensive than running a supermarket.

  15. In truth “they” know the booze crisis is all a non-problem, so the best thing for it is a non-solution.

    “They” know minimum pricing won’t fly but they can say, “they” tried but the nasty EU types stopped them.

    On the other hand they could get away with a tax but upset Middle England, so previous option the best.

    Or am I crediting “they” with too much savvy?

  16. @john b,

    [A somewhat belated response] – I was replying to your earlier post where you said “it’s not like continental lager’s expensive in the UK, at six for a fiver” – under the minimum pricing proposals, that would be £7.50.

  17. Pingback: A Link to the Past 10/08/2012 « In Defence of Liberty

Leave a Reply

Your email address will not be published. Required fields are marked *