Alcohol tax

[Nimrod103]

I see two main problems:

- It's very regressive, penalising most those who already can only afford supermarket booze. Many families could only dream of paying £10 for a bottle of wine..

"Regressive", when used about taxes, is one of those words that is trotted out as if we all agree that taxes should not be regressive. But that is far from the case. For instance VAT is regressive but it is also the biggest revenue earner for the government after income taxes. Why? Because it is so broad-based. And indeed "regressive" in this context can be seen as just another word for "broad-based". Except that the latter sounds much better as it implies many people pay it and therefore the actual rate and amount of the tax can be lower than taxes that are levied on only a small minority e.g. inheritance tax.

It's just a word. Pretend I used a different one if you object to it. My point was the arrogance in the OP with "Most drinkers shouldn't really feel much difference in their pocket". If "most" is supposed to apply to the whole UK population rather than the (mostly) affluent readership on this board, or Clitheroekid's cronies, it shows breath-taking tone-deafness.

Scott.

Governments for years have used the tax system to favour one type of spending over others, or favour one group of people or companies over others. I see no reason why they should not use the tax system to protect an internationally recognized British institution (viz pubs) against being undercut by soul-less supermarkets.
They already use the tax system to penalise the poor man's transport (older diesel cars, or in fact any ICE car) relative to the expensive shiny Tesla. There is a real regressive tax.

[Lootman]

"Regressive", when used about taxes, is one of those words that is trotted out as if we all agree that taxes should not be regressive. But that is far from the case. For instance VAT is regressive but it is also the biggest revenue earner for the government after income taxes. Why? Because it is so broad-based. And indeed "regressive" in this context can be seen as just another word for "broad-based". Except that the latter sounds much better as it implies many people pay it and therefore the actual rate and amount of the tax can be lower than taxes that are levied on only a small minority e.g. inheritance tax.

It's just a word. Pretend I used a different one if you object to it. My point was the arrogance in the OP with "Most drinkers shouldn't really feel much difference in their pocket". If "most" is supposed to apply to the whole UK population rather than the (mostly) affluent readership on this board, or Clitheroekid's cronies, it shows breath-taking tone-deafness.

Governments for years have used the tax system to favour one type of spending over others, or favour one group of people or companies over others. I see no reason why they should not use the tax system to protect an internationally recognized British institution (viz pubs) against being undercut by soul-less supermarkets.

They already use the tax system to penalise the poor man's transport (older diesel cars, or in fact any ICE car) relative to the expensive shiny Tesla. There is a real regressive tax.

There are really two points here that are being conflated. One is the idea that progressive taxes are "good" and regressive taxes are "a problem". I sought to dismiss that prejudice on the grounds that at least some taxes should be broadly based rather than narrowly based. As scrumpyjack phrased it, everyone should pay something, so they are vested in the game. In practice we need a blend of progressive and regressive taxes. There is nothing inherently wrong with a regressive tax.

The second issue is whether taxes should seek to bribe or blackmail people into different behaviours. My own view is that they should not, as then they become too ideological. An ideal tax system in my view would be neutral to behaviour, and would have broad, simple rates, ideally flat ones.

There was a trend towards simple, flat and neutral taxes in the 1980s and 1990s, but that seems to be forgotten now. Governments just can't help but meddle and tinker.

[gryffron]

[Scottish] Shops must apply a minimum price based on alcohol content. This rarely affects Pubs and Restaurants where the prices are normally higher than the minimum, but it does affect bumper packs of low cost alcohol in supermarkets. It is however, not a tax, and is not collected by government.

So hang on. Where does the money for this minimum price alcohol go then?

Presumably it lines the pockets of the very supermarkets the govt is trying to penalise? Thus giving them even more incentive to sell more alcohol. Push it to the front of the store. Even (invisibly) subsidise other goods to get shoppers in to buy more alcohol.

Gryff

[swill453]

[Scottish] Shops must apply a minimum price based on alcohol content. This rarely affects Pubs and Restaurants where the prices are normally higher than the minimum, but it does affect bumper packs of low cost alcohol in supermarkets. It is however, not a tax, and is not collected by government.

So hang on. Where does the money for this minimum price alcohol go then?

Presumably it lines the pockets of the very supermarkets the govt is trying to penalise? Thus giving them even more incentive to sell more alcohol. Push it to the front of the store. Even (invisibly) subsidise other goods to get shoppers in to buy more alcohol.

Interesting thought, but in reality alcohol sales went down https://www.holyrood.com/news/view,alco ... _15027.htm

Scott.

[UncleEbenezer]

So hang on. Where does the money for this minimum price alcohol go then?

Presumably it lines the pockets of the very supermarkets the govt is trying to penalise? Thus giving them even more incentive to sell more alcohol. Push it to the front of the store. Even (invisibly) subsidise other goods to get shoppers in to buy more alcohol.

Gryff

I could be talking through my posterior here. But I have some dim recollection of this question being raised by journos, and some supermarket spokesman agreeing, and saying they were going to ringfence those revenues for Good Causes.

Though even if correct, that's still entirely down to the discretion of each supermarket's management.

[Dod101]

So hang on. Where does the money for this minimum price alcohol go then?

Presumably it lines the pockets of the very supermarkets the govt is trying to penalise? Thus giving them even more incentive to sell more alcohol. Push it to the front of the store. Even (invisibly) subsidise other goods to get shoppers in to buy more alcohol.

Gryff

I could be talking through my posterior here. But I have some dim recollection of this question being raised by journos, and some supermarket spokesman agreeing, and saying they were going to ringfence those revenues for Good Causes.

That will not be Tesco though, I imagine, considering that they took the business rates relief and used it to help fund their dividend. The government is far from penalising the supermarkets.

I always thought it was plain stupid of Nicola to force a rise in the price of alcohol and leave the increase in the pockets of the supermarkets. You can see this very clearly. For instance, a litre of cooking whisky costs at least £20 in Scotland. I was visiting a friend of mine last week and he lives about a mile inside the Scottish border near Berwick upon Tweed. At Morrisons at the Northern end of Berwick, the self same (Scotch) whisky is on sale for £16. I of course relieved them of a couple of litres.

Dod

[swill453]

I always thought it was plain stupid of Nicola to force a rise in the price of alcohol and leave the increase in the pockets of the supermarkets. You can see this very clearly. For instance, a litre of cooking whisky costs at least £20 in Scotland. I was visiting a friend of mine last week and he lives about a mile inside the Scottish border near Berwick upon Tweed. At Morrisons at the Northern end of Berwick, the self same (Scotch) whisky is on sale for £16. I of course relieved them of a couple of litres.

So in your specific example, the supermarket didn't get the increase. In general, alcohol sales went down, so whether the supermarkets increased profit overall isn't clear.

Scott.

[didds]

It could also be justified on health grounds. Apparently, alcohol consumption has increased substantially over the past few months, so doubling the tax should, at least in theory, help to stem the increase.
Any thoughts?

Yes - the Scottish minimum price was justified on such grounds, and I'm completely in agreement.

I recall there was a thought that with minimum pricing (MP) this would push prices of "cheap drinks" eg industrial cider, into the same realm of cheap spirits tyat were already meeting the area of the MP ... so instead of spending the money on higher priced cider there would just be a move towards instead buying whiskey.

has that appeared to be the case in reality?

and given dependency has an inelastic demand has it actually had a real effect on overall alcohol consumption? eseopcially if measured in units consumed rather than liquid volume (cos one tot of whiskey is tiny compared to half a pint of cider etc)

[ UPDATE : Scott has already provided a link to suggest it has indeed ]

Of course "taxes" (or whatever you want to call them) like this actually end up punishing occassional and "sensible" drinkers as they also have to pay the higher prices even though they are not the target of the increases. CF the argument about increasing the cost of petrol/diesel for a fairer "user pays" solution - which is then said to hit community doctors, nurses etc that have no choice

cheers

didds

[didds]

I could be talking through my posterior here. But I have some dim recollection of this question being raised by journos, and some supermarket spokesman agreeing, and saying they were going to ringfence those revenues for Good Causes.

Maybe (?) that is being confused with the plastic bag "tax" ?

[scotia]

[Scottish] Shops must apply a minimum price based on alcohol content. This rarely affects Pubs and Restaurants where the prices are normally higher than the minimum, but it does affect bumper packs of low cost alcohol in supermarkets. It is however, not a tax, and is not collected by government.

So hang on. Where does the money for this minimum price alcohol go then?

Presumably it lines the pockets of the very supermarkets the govt is trying to penalise? Thus giving them even more incentive to sell more alcohol. Push it to the front of the store. Even (invisibly) subsidise other goods to get shoppers in to buy more alcohol.

Gryff

It goes to the shop selling the alcohol. Presumably they previously sold it at the low price to bring in increased customer numbers, so if that no longer occurs, presumably their profits have been reduced. The minimum price legislation was introduced in May 2018. NHS research found that alcohol sold in Scotland's shops dropped by 3.6% in the first year following the legislation.
Scotland's shops are also banned from alcohol multi-buy discounts. This was introduced in 2011, along with restrictions on alcohol advertising around the premises. This legislation was claimed to have reduced overall sales of alcohol by 2.6% in the year following its implementation.

[didds]

Interesting thought, but in reality alcohol sales went down https://www.holyrood.com/news/view,alco ... _15027.htm

"In Scotland the volume sold since the introduction per person fell by 3.6 per cent, from 7.4 to 7.1 litres."

So if someone used to buy 2L of industrial cider at 7% (14 units) but now instead buys half a litre of scotch @ 40% (14 units) ... that's a reduction in volume sold but no change whatsoever in alcohol consumed.

didds

[swill453]

Interesting thought, but in reality alcohol sales went down https://www.holyrood.com/news/view,alco ... _15027.htm

"In Scotland the volume sold since the introduction per person fell by 3.6 per cent, from 7.4 to 7.1 litres."

So if someone used to buy 2L of industrial cider at 7% (14 units) but now instead buys half a litre of scotch @ 40% (14 units) ... that's a reduction in volume sold but no change whatsoever in alcohol consumed.

By "volume" they mean volume of pure alcohol. So the average person would buy less scotch.

Scott.

[Lootman]

For instance, a litre of cooking whisky costs at least £20 in Scotland. I was visiting a friend of mine last week and he lives about a mile inside the Scottish border near Berwick upon Tweed. At Morrisons at the Northern end of Berwick, the self same (Scotch) whisky is on sale for £16. I of course relieved them of a couple of litres.

What is to stop canny Scots doing shopping runs across the border on a massive scale? Don't such arbitrage opportunities completely undermine attempts to deliberately over-price alcohol, or anything else, when you have a completely porous border?

You see similar things close to the borders of US states with very different laws and taxes around alcohol e.g. Alabama and Tennessee, Utah and Nevada, or any state that borders Canada.

[Dod101]

I think 2011 saw the introduction of the 10am* to 10pm time limits as well. Particularly annoying if you like doing your shopping sharpish and fancy a cheeky bottle of red to have with that steak later on.

*Except (and even more annoyingly) on a Sunday, when it's still midday before you can purchase. is this still a churchie thing so folk wouldn't turn up pished to worship?

Sunday times are the same as any other day now I think. That was changed at the same time as the 10 am to 10 pm hours were introduced. I have Googled it and that is what it says, which accords with my own feelings.

Dod

[Dod101]

I always thought it was plain stupid of Nicola to force a rise in the price of alcohol and leave the increase in the pockets of the supermarkets. You can see this very clearly. For instance, a litre of cooking whisky costs at least £20 in Scotland. I was visiting a friend of mine last week and he lives about a mile inside the Scottish border near Berwick upon Tweed. At Morrisons at the Northern end of Berwick, the self same (Scotch) whisky is on sale for £16. I of course relieved them of a couple of litres.

So in your specific example, the supermarket didn't get the increase. In general, alcohol sales went down, so whether the supermarkets increased profit overall isn't clear.

Scott.

I do not know if overall supermarkets in Scotland have gained or not by the minimum pricing legislation but I see no reason why the supermarket should benefit by the forced increase in the cost which is imposed by the Government and is usually called a tax. Like other increases in costs imposed by the government, this may or may not reduce demand but that is usually a separate issue.

Dod

[FairTrial]

The Scotch Whisky Association challenged the minimum pricing legislation, and the case was referred to the Court of Justice of the EU.

The CJEU stated that minimum pricing was contrary to EU law and could only be implemented if it satisfied a public health exception. Whether a public health exception existed was a matter for the national court.

The Court of Session followed by the Supreme Court said that the Scottish Government had proven that minimum pricing had a public health benefit and therefore the legislation stood.

My personal view is that the Court of Session and the Scottish judges in the Supreme Court acted criminally by failing to disclose their links to the Scottish Government, and that the question of whether minimum pricing has a public health benefit remains open as it has never been decided by an independent and impartial tribunal...

[Alaric]

What is to stop canny Scots doing shopping runs across the border on a massive scale?

Geography mainly I would imagine. The border runs North east to south west roughly from Berwick to Carlisle. It's open country for the most part, a longish distance from population centres in Scotland.

The example was Scotch selling for £ 16 in England and £ 20 in Scotland, so not a massive saving.

[JohnB]

Isn't minimum pricing like introducing a cartel, where all supermarkets gain from the higher markups. If they used to buy cider at 50p/can and sell it at £1, and now sell 5% less at £1.50, they are making more profit.

Of course in reality its more complicated as supermarkets do not apply even markets, and are happy with loss-leaders

[Dod101]

What is to stop canny Scots doing shopping runs across the border on a massive scale?

Geography mainly I would imagine. The border runs North east to south west roughly from Berwick to Carlisle. It's open country for the most part, a longish distance from population centres in Scotland.

The example was Scotch selling for £ 16 in England and £ 20 in Scotland, so not a massive saving.

That is of course the point I was making re my purchases in Morrisons at Berwick upon Tweed last week. Over the Border, a litre of standard scotch whisky or gin is £20 but Morrisons have it very well promoted at £16. I bought two of each so saving £20 or 20%, a saving well worth having as far as I am concerned.

A bit like those who wish to drink in a pub (or more precisely outside a pub) driving from South Queensferry over the Forth Crossing into the Kingdom of Fife.

Dod

[Lootman]

What is to stop canny Scots doing shopping runs across the border on a massive scale?

Geography mainly I would imagine. The border runs North east to south west roughly from Berwick to Carlisle. It's open country for the most part, a longish distance from population centres in Scotland.

The example was Scotch selling for £ 16 in England and £ 20 in Scotland, so not a massive saving.

True but if you have a decent-sized van or truck you could transport a very large number of items at £4 profit per item. People have been doing runs like that in vans to France for decades now, and that involves ferries and customs, but is still worthwhile.

I guess I just think that the ideological hubris of governments should be punctured by enterprising individuals.