Minimum pricing scheme could be reformed further

Scotland's minimum alcohol pricing scheme has led to an 11 per cent fall in the number of units of alcohol purchased per week - with a higher reduction by heavy drinking households – but could be reformed further.

The report found that heavy drinkers were more targeted by the minimum pricing scheme.

A report by the Institute for Fiscal Studies (IFS) found that although well targeted at heavier drinkers, the minimum unit price reduces competition in the alcohol market, reducing tax revenue and creating windfall revenues for the alcohol industry. The analysis finds that if the 50p minimum unit price were extended to the whole of the UK under the existing system of alcohol taxes, then tax revenue would fall by around £390 million per year.

However, the study claimed that replacing the current system of duties with a two-rate structure that taxes alcohol in proportion to its alcohol content, with a higher rate on strong spirits, would be almost as well targeted at heavy drinkers as a minimum unit price and would lead to an increase in tax revenue of over £70 million. The report’s authors said that now that the UK has left the European Union, there is scope to improve the way that alcohol is taxed.

Half of Scots now back minimum pricing for alcohol despite early fears

Kate Smith, associate director at IFS and an author of the research, said: "The current system of alcohol duties is incoherent – for example, if you prefer a pint of beer to cider, you may currently pay more than twice as much tax for a drink with the same alcohol content. Brexit offers a valuable opportunity to improve the way we tax alcohol. A simple reform that taxes drinks in proportion to their alcohol content, with a higher rate on strong spirits, targets the purchases of heavy drinkers while raising tax revenue.”

A report published earlier this year by Public Health Scotland found that almost half of Scots are now in favour of the minimum unit pricing of alcohol despite initial concerns over the impact of the scheme when it was introduced in 2018.

Martin O’Connell, deputy research director at IFS and an author of the research, said: "The Scottish minimum unit price reduced alcohol purchases of the heaviest drinkers – those whose drinking likely creates the largest costs to society and themselves – but this comes at a cost of reducing tax revenue. Reforming the way that alcohol is taxed can limit the reduction in tax revenue caused by minimum pricing.”

Implemented in 2018, the measure aimed to tackle alcoholism north of the border by stating each unit of alcohol must cost at least 50p in a bid to raise the price of high-strength drinks. The move was initially met with some push back when in 2015 only 41.1 per cent of people supported it and 33.4 per cent opposed it.

MSPs were warned last month that the Scottish Government is "likely" to face a court challenge if it seeks to raise the minimum alcohol price under controversial plans for a UK single market.

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