'Tax too blunt to deal with binge drinkers'

By Ewan Turney

- Last updated on GMT

Related tags: Minimum price, Alcoholic beverage, Drinking culture

Supermarkets: could absorb tax increases
Supermarkets: could absorb tax increases
Minimum price advocate Greene King has stressed that using tax to increase supermarket prices is a "blunt instrument" and inherently "risky". The...

Minimum price advocate Greene King has stressed that using tax to increase supermarket prices is a "blunt instrument" and inherently "risky".

The Suffolk-based brewer and pub operator commissioned a study, by FTI Consulting, on a recent report by the Institute of Fiscal Studies (IFS)​.

The IFS report had claimed that a minimum price of 45p a unit would do little to benefit the public purse and would simply add to the coffers of the large supermarkets to the tune of £700m.

It suggested a tax on the number of units in a drink to "mimic" a minimum price scheme.

However, while Greene King's report noted the IFS's work was of "high quality" and a "useful contribution to the minimum price debate", it took issue with using tax as a way to raise prices.

It said a tax-based solution would be an "inappropriate" response because:

• It is a blunt instrument that affects all consumers not just problem drinkers

• There is a risk that a tax increase would not be passed on by supermarkets to consumers

• It could lead to an increase in booze cruises and illicit cross border trade, which already accounts for 10% of UK beer consumption and costs the UK Exchequer £600m in lost revenue a year

Greene King also believes that the alcohol industry would not benefit from a minimum price but would actually lose out at a cost of between £590m and £1.2bn a year.

It said a minimum price would provide a targeted solution to problem drinking "raising the level of the lowest priced alcohol and directly tackling the behaviour which is causing most concern".

Unable to compete

"Neither banning below cost selling, which seems to be the current favoured approach of the government, nor resorting to raising taxes, are the answer to addressing this important social problem," it said.

"A tax rise would affect not only the small minority of problem drinkers, but also the majority who drink responsibly. The core problem lies with a minority of people purchasing cheap booze from off licences and supermarkets and so using tax as a method to address this would penalise further community pubs and responsible drinkers, which are not part of the problem.

"A minimum price, however, would go right to the heart of the issue, targeting easily available alcohol sold at pocket money prices.

"Many pubs are unable to compete against the pricing and promotional tactics deployed by some parts of the off-trade to sell alcohol at irresponsible prices.

"This ongoing shift from regulated and controlled 'drinking out' in pubs to less regulated 'drinking in' before going out has had significant negative social consequences for the UK, as well as providing a challenging backdrop for the industry."

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Related topics: Legislation

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