2008 Budget: Tax increases on alcohol

Duty on alcoholic drinks has been increased by 6% more than the rate of inflation. In his address to the House of Commons, the Chancellor said,

“Mr Deputy Speaker, as incomes have risen, alcohol has become more affordable.

In 1997, the average bottle of wine bought in a supermarket was £4.45 in today’s prices. If you go into a supermarket today, the average bottle of wine will cost about £4.

From midnight on Sunday, alcohol duty rates will increase by 6 per cent above the rate of inflation. Beer will rise by 4p a pint, cider by 3p a litre, wine by 14p a bottle and spirits by 55p a bottle.

Alcohol duties will increase by 2 per cent above the rate of inflation in each of the next four years.

Mr Deputy Speaker, it is only because I have taken these decisions on alcohol and on closing tax loopholes that I am able to provide additional support for families and lift more children out of poverty.”

Institute of Alcohol Studies response

The IAS welcomes the rise in levels of excise on alcohol as announced in today’s Budget. This will go some way towards addressing the increase in the affordability of alcohol that has occurred over the past twenty years. The evidence suggests that consumption will fall, along with alcohol-related harm. The tax system can thus be used to both raise revenue and address public health considerations.

The rise on alcohol taxation will not alone, however, address the growing discrepancy between the cost of alcohol in pubs and the cost of alcohol brought from supermarkets. Such pricing discrepancies continue to have worrying public health implications. The IAS calls upon the government to continue pressure upon supermarkets to halt the sale of alcohol at below-cost prices.

Doctors welcome tax increases 

Alcohol Health Alliance response

Professor Ian Gilmore, President of the Royal College of Physicians and Chair of the UK Alcohol Health Alliance, welcomed today’s tax increases:

“We welcome the Chancellor’s decision to increase tax on alcohol.  The international evidence suggests that even moderate taxation rises will reduce alcohol-related deaths and this move, although modest, shows that the Government finally recognises the importance of taxation in reducing alcohol-related harm in the UK.

“Alcohol is now 65% more affordable than it was in 1980, and we need to reverse this trend. This welcome direction of travel needs to be joined by other public policy measures to reduce availability, limits on advertising and promotion, and the introduction of better measures of screening and treatment for those drinking at levels likely to harm their health.

The impact of an increase in duty on alcohol will be effective only if combined with strong Government action to prevent irresponsible discounting and promotions by the retail industry.  We call on the Government to tackle this.”

British Medical Association response

The BMA is pleased that one of the recommendations in its recent report on alcohol misuse, to increase taxation on alcohol, has been adopted by the Chancellor of Exchequer, Alistair Darling, in today’s (Wednesday 12 March 2008) budget.

Dr Vivienne Nathanson, the BMA’s Head of Science and Ethics, said: “It is very important that tax increases on alcohol are part of a larger plan to reduce problem drinking.”  She added:

“The evidence tells us that the cheaper and more accessible alcohol is the more people will drink.  The government needs to tackle this issue so it’s good news that ministers have made a start today.  These tax increases may be unpopular with some members of the public but we hope that they will look at the wider issue and recognise that the UK has a real problem on its hands regarding alcohol misuse.
Tough action is needed.  The UK is one of the heaviest alcohol consuming countries in Europe.

“Drinking in moderation is enjoyable and may be good for you.  Drinking way over the recommended guidelines costs many people their health and ultimately their lives.  The UK spends millions of pounds every year on treating people with alcohol problems and dealing with the crime and violence often associated with alcohol misuse.”

British Liver Trust response

The British Liver Trust welcomes the rise in taxes on alcohol, yet there is far more to be done to prevent health harm caused by drinking. Legislation is needed to enforce a minimum price per unit. This would prevent a unit being bought for as little as 15 pence.

Alison Rogers, Chief Executive of the British Liver Trust, says: “With the recognition by the government that the price of alcohol is a factor in harmful drinking levels, it is time to take it a step further and legislate for a minimum price per unit.

There is a matrix of responsibility in tackling the health harm caused by alcohol. Individuals have a degree of responsibility in assessing their own drinking behaviour and deciding whether it will impact their health and wellbeing. However, as a nation we can send clear messages about the fact that alcohol is not an ordinary commodity and certainly should not be available at pocket money prices. Additionally, the government could ensure that supermarkets are not allowed to sell alcohol for under, say, 40p or 50p a unit.”

Last month the British Liver Trust conducted a report, which highlighted how cheap alcohol can be bought for. The Trust found a three litre bottle of 5% cider cost £2.39 (79p per litre), an equivalent of 15.8p a unit. Rogers comments: “Sadly 3p on a litre of cider is going to make little difference to the choice a youngster makes when they think about that night’s ‘binge’”.

“Alcohol is costing us very dear and it is time society woke up to this fact. It is not just the drinkers typified in the media, it is anyone who exceeds their limits,” added Rogers.

The Trust appreciates that there is a long way to go in encouraging people to drink at safe levels to avoid health problems. Unfortunately, drinking to excess has become part of British culture. Until this mentality changes through a series of measures including price, education, legislation and joined up thinking in government, the harms we are creating will only get worse.

For (pre-budget) considerations on alcohol taxation, compiled by the IAS, click here.