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IFS predicts booze pricing law will aid retail


A minimum pricing law of 45p per unit of alcohol would generate £400 million in extra revenues for retailers if rolled out across Britain, the Institute for Fiscal Studies (IFS) has claimed.

Tesco, Asda and Sainsbury’s would see the largest increase in revenues in this hypothetical situation as they sell the most alcohol but value supermarkets such as Aldi, Netto and Lidl would see the biggest percentage increase.

Legislation to enforce a 45p minimum price per unit on alcohol was scrapped at committee stage by the Scottish parliament earlier this month but similar plans have been touted by local and national government.

Andrew Leicester, Senior Research Economist at the IFS and one of the authors of the research, said: “Minimum alcohol prices would transfer large sums from consumers to those firms that retail and produce alcohol, but may target households that consume the most alcohol more directly than increases in alcohol taxes.”

A change on the lines of what was proposed in Scotland would have a huge impact of alcohol trade with 85 per cent of alcohol units costing more than 45p in 2007 and the report admits that the consequences of such a move would be hard to predict.

Poor drinkers would be hit hardest by minimum charging as they do not necessarily drink more than the better off but they do try and drink cheaper.

Off-licensed alcohol consumption of those on annual salaries of less than £10,000 would fall by 25 per cent following the introduction of a 45p per unit minimum price according to the study, compared to a fall of 12 per cent for those on more than £60,000.

Changes to alcohol taxation would be a fairer way of tackling the problems of ‘booze Britain’, the report’s authors argue, because this would raise much needed tax revenues for the economy.

Leicester added: “The government should seek to change European regulations on how alcohol taxes can be structured, so that taxes can mimic the impact of minimum prices whilst ensuring the resulting revenues go to the government and not firms.”

Published on Tuesday 28 September by Editorial Assistant
Tags: IFS Grocery

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