· Excessive
drinking creates costs to public services which the government can recoup
through alcohol taxes, thereby making drinkers internalise the costs.
· However, in
Britain, the alcohol duty regime is excessive and illogical. Not only do
revenues from alcohol duty far exceed the costs to public services, but units
of alcohol are taxed at dramatically different rates depending on what type of
drink they are in. The tax on a unit of alcohol ranges from 7p to 34p.
· A flat
rate of 9p on every unit of alcohol sold would raise approximately £4.6 billion
(at current rates of consumption), totally off-setting the external costs of
drinking to public services. Alcohol would continue to earn the government
additional revenue in the form of VAT on the product, VAT on the duty, and
other taxation on the alcohol and hospitality industry.
· A 9p/unit
tax would pay for all the costs incurred to public services by alcohol abuse
and would incentivise the development of lower strength drinks across the
board. It would also effectively create a minimum unit price of 11p (including
VAT on the duty). Alcohol duty evasion, currently valued at £1.8 billion per
annum, would likely fall as a result of the lower price of beer, wine and spirits.
·
A 9p/unit tax would ensure that alcohol duty is a tax on alcohol,
not an arbitrary tax on fluids. EU regulation currently prohibits this system
of alcohol taxation. Outside of the EU, Britain will no longer be constrained.
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