Duty on Alcohol is a Blunt Instrument

So the government says it wants to reduce binge drinking because it is a cause of ill-health, violence, and it costs a fortune in policing. You can’t really argue with that. But all they have is alcohol duty to keep pushing the price up. And the effect of that is that pubs are closing at an increasing rate. The blunt instrument that is alcohol duty is killing the patient.

In his pre-budget report the Chancellor reduced VAT to 15%, but punished the pubs by cancelling out the cut with a matching rise in duty on beer. At a time when pubs (like shops and almost every other business) are losing customers, this makes no sense. It’s not as if the cut in VAT will lead directly to cuts in retail prices anyway; it might help businesses maintain their margins though.

I have no problem with using price to change behaviour, but most pubs are civilized pleasant places. So why make them pay for the irresponsible behaviour of others and why make them bear a disproportionate burden in these difficult times?

More here, here, and here.

Edit 27/11/2008: The Chancellor has sharpened his blade a little and conceded that one tax rise doesn’t fit all; duty on spirits (whisky, vodka, alcopops) will now ‘only’ rise by 4%. But it looks like this is not about drink, it’s about pubs and beer. Duty on beer will rise by the full amount as announced earlier this week.

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