‘Sin tax’ will hit moderate drinkers hardest

Published on 15/05/2012 01:52

THE policy of minimum pricing will penalise the poor and I don’t see it reducing alcohol consumption among alcoholics and problem drinkers.

Minimum pricing is focused on low-price drinks and therefore deliberately targets products that are disproportionately consumed by the poor. The state already gets enormous amounts of money through alcohol duty and with minimum pricing we clearly have a sin tax – something specifically designed to discourage purchases that are seen as harmful to health.

The policy is also a revenue raiser. It’s about social engineering and trying to change behaviour and alcohol consumption. To some extent it will change alcohol consumption, but we won’t see a decline in the right places, as it will be moderate drinkers who are most affected.

Most of those addicted to alcohol will just continue to shell out money for drink and we’ll simply see people on low incomes spending more of their incomes on drink. Taxes on alcohol and cigarettes like this are regressive and hit the poor hardest. We already know, for example, that people on low incomes are three times more likely to smoke than those on higher incomes.

There’s also the issue of a legal challenge and it’s very clear that there would have to be a change in European Union law.

Sin taxes have been tried on fatty foods and fizzy drinks in parts of America in the past and didn’t work, so there’s no reason to believe this policy will be any different. Policies like that of minimum pricing do little good if any and can often have unintended consequences by making a problem worse.

l Chris Snowdon is a fellow at the Adam Smith Institute