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Use Brexit to shake up “irrational” alcohol duty system, think-tank says

Pour decisions?
The case for reforming alcohol duty

Duty on alcohol should be dramatically overhauled so that the stronger a drink is, the more tax it incurs, according to a new report from the Social Market Foundation (SMF), a cross-party think tank. Pour decisions? The case for reforming alcohol duty, released today, suggests that existing duty rules are inconsistent and unfair, and make some drinks such as high-strength cider unjustifiably cheap.

To resolve such inconsistencies and discourage harmful heavy drinking, the SMF propose a shift in the burden of taxation towards high-strength drinks bought for consumption at home, and away from weaker products bought in pubs and bars. A new 'strength duty escalator' would mean that the duty per unit of alcohol rises with the strength of the product, and a Pub Relief scheme would focus taxes on the off-trade, which is particularly reliant on sales to hazardous and harmful drinkers.

The report also calls for alcohol taxation to be 'depoliticised' and guided by regular expert reviews of the harms caused by excessive drinking.

SMF further highlighted EU rules that currently limit UK ministers’ scope to implement a more rational alcohol duty policy, suggesting that Brexit might make it easier make reforms. For example, the proposed Pub Relief scheme is not currently possible under EU law.

The SMF report was sponsored by the Institute for Alcohol Studies. SMF retained full editorial independence.

Scott Corfe, SMF research director and author of the report, said:

'The way we tax alcohol today is a mess. Inconsistent, irrational duty rates based on politics and special pleading mean drinks closely associated with serious medical and social harm are unjustifiably cheap.

'A consistent, well-planned duty regime could discourage the riskiest drinking, support the pub trade and reward manufacturers who reduce the strength of their products. Alcohol should be taxed on the basis of evidence, not politics.'

Katherine Severi, chief executive of the Institute of Alcohol Studies said:

'This new report from SMF highlights the illogicality, loopholes and perverse incentives that pervade the way we tax alcohol. For too long, politicians have set alcohol duty with more concern for newspaper headlines than the health and welfare of the country. We therefore welcome SMF’s proposal that alcohol taxes should be set on the basis of a rigorous independent evidence review every 5-10 years.

'Post-Brexit, if the UK is no longer bound by EU Directives on alcohol taxation, the government should restructure the duty system to ensure that stronger products are taxed at a proportionately higher rate. At the same time, SMF demonstrate that Brexit should not be an excuse for inaction. Even under the current rules, the government can take a common sense approach to taxing alcohol by ending the favourable treatment of cider. This would save lives and protect some of the most vulnerable groups in society.'

Read the full report here.