Monday, 16 March 2009

More price controls on booze

A few posts back I commented on the proposal to introduce minimum prices on alcohol in Scotland. It hasn't taken long for this suggestion to drift south of the border. Sir Liam Donaldson, the Chief Medical Officer for England, wants a 50p per unit minimum. (link)

The first thing I notice is 10p inflation - the Scottish proposal was for 40p per unit.

Sir Liam's proposal would make a bottle of wine (75cl) cost £4.50 minimum, a six pack of beer £6.00.

My feeling is that if it's good for the Scots then it's good for the English. In England it is estimated that 3,400 lives per year would be saved; there would be 46,000 fewer crimes committed, and 100,000 fewer hospital admissions.

On the downside the higher 50p tariff would impact more than half of all drinkers whereas the Scottish proposal would only have hit ten percent of them. The big difference is because the 40p to 50p per unit window is where most booze is priced. For example the average cost of a bottle of wine is about £4.00 or just under. So, while in Scotland the discerning drinker would not have been affected in the slightest by the proposal in England they may just be. It's around £4.50 to £5.00 that you start to find bottles of wine that are actually drinkable. (To be on the safe side you should really aim to spend more than £5.00 - however, don't spend more than £15, you'd be wasting your money, except on champagne of course.)

There seems to be two strands of opinion against price controls: those who are against because they think it's a tax-raising measure, and those who are against because it would increase their costs and they are sensible drinkers.

The first group have misunderstood the proposal. Taxes on booze would not increase. Retailers would simply not be allowed to sell for less than the prescribed minimum. In fact tax yield to the exchequer would fall while profit-per-unit for the retailer would increase. (The tax fall is just one reason the government is unlikely to accept the proposal.) A desirable side effect is that manufacturers, no longer legally able to compete on price, would have to compete on quality instead.

The second group has a fair point, however they should bear in mind that their taxes are already paying for the general legal and medical mopping-up of binge drinkers. The police, court, ambulance and hospital time lost to drink is monumental. But it is fair to say that a non-taxpaying sensible consumer of cheap booze, for example a student, would be worse off under these proposals.

To which I say - tough! (I'm a tax-payer.)

And anyway, at least in England it's very unlikely that these proposals will become law. Our government is addicted to taxes worse than any alcoholic and a tax-take fall would be anathema to them. They would prefer to increase taxation on booze, despite the fact this makes high quality, expensive tipples even more expensive for no good reason.

And finally it's worth remembering that in France a bottle of decent wine costs £1.50 and they don't have a binge drinking problem. Why is that I wonder?

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