‘Use VAT to combat cheap drinks’
Last week, the Scottish National Party reintroduced its controversial bill on minimum pricing after proposals for a 45p-per-unit scheme were defeated earlier in the year. Its increased majority means the bill will be pushed through.
But it appears inevitable the scheme will face scrutiny under European law. Public health minister Ann Milton said Scotland would be “challenged, and that will clarify the law”.
She added: “Our advice is that [minimum pricing] is illegal. We have to be very careful about penalising the majority because of the minority.”
Speaking at a keynote seminar on responsible drinking, Donald Henderson, head of the Scottish Government’s public health division, said: “We think it is probably not illegal.
“The European Court of Justice has had an opportunity to opine clearly on the question of price and health, and it has dodged it.”
The issue continues to divide retailers and producers, and trade leaders believe a VAT cut for the hospitality trade on food and drink is a better way to push people to drink in a supervised environment, and create jobs.
“We are sceptical about giving Government the power to set prices,” said Association of Licensed Multiple Retailers boss Nick Bish. “But we’re exasperated that nothing has been done to combat pocket-money prices in the supermarkets. A ban on below-cost selling was promised, which was diluted to a below-tax ban. There’s been no action. Government could pull lots of levers; our preferred one would be VAT.”
British Beer and Pub Association chief executive Brigid Simmonds said her members were divided on minimum pricing and expressed concerns the real winner would be supermarkets pocketing extra cash, unless a large retailer levy was introduced, as is planned in Scotland.
“We would like to see a cost of production introduced to the below-cost ban and we are hugely supportive of action on VAT,” she said.
French lobbyist Jacques Borel, the man behind France’s 19.6% to 5.5% VAT cut, said 25 major operators have signed up to the campaign to cut VAT to 5% — and he expects that to reach 50 by next Easter.
“I went to see the Government, Treasury, MPs and heads of the big pub and restaurant chains,” he said. “They said it will never work. They sentenced it to disaster, but when people tell me it won’t work — it will. People have no vision.
“It will work in Britain because there is no choice. We have to create jobs.”
Borel said it was on track for getting something on VAT in the 2013 Budget.
Wetherspoon boss Tim Martin, an ardent supporter of a VAT cut, said: “Pubs are going to close down and supermarkets are going to open up if we pay 20% VAT on food and they pay nothing.
“That force on the pub business, combined with excise-duty rates among the highest in Europe and going up, is a pincer movement that will close down pubs week by week.”
