Minimum Alcohol Pricing: The Government’s worst idea yet

According to the taxpayer funded lobby group which came up with the idea, “Minimum Unit Pricing” for alcohol is a simple enough idea. Here is what they say:

“Minimum unit pricing (MUP) is a “floor price” beneath which alcohol cannot legally be sold and is based on the amount of alcohol in a product, measured in grammes. One standard drink in Ireland contains 10 grammes of alcohol and an MUP would apply per standard drink.”

The idea is not hard to understand. The objective of the policy is to eliminate cheap drink. This is spelled out on the Alcohol Action Ireland website:

Some of the off-trade alcohol, particularly in supermarkets, where alcohol is often sold as a ‘loss leader’ or below cost, is so cheap that a woman can reach her low-risk weekly drinking limit for just €5.49, while a man can reach this weekly limit for less than €9.

Consider that paragraph: The harm that they want to fix is explicitly expressed, right there in front of your face. The objective is to make alcohol more expensive, so that people will not be able to obtain it so cheaply, meaning that people will drink a smaller amount of alcohol.

This is, however, a terrible policy. Here are six reasons why:

It is a regressive policy which targets the poor

All taxes and charges that are applied on things that you buy are, by nature, what economists call “regressive”. That means that they take a bigger proportion of a poor person’s income than they do from a rich person. In layman’s terms, a €15 bottle of wine on a Friday night is not a big deal for a middle-class person, but it is quite the extravagance for somebody on the dole. When the Government says it intends to make alcohol more expensive to discourage people from buying it, what they mean is that they will discourage poorer people, mainly, from buying it.

It is price fixing, not a tax

When you think of “the Government putting up the price of alcohol” you probably think of how they put up the price of cigarettes or a pint of beer in the budget. In that case, they increase the excise duty, meaning that they get an extra 50p in tax for every packet of cigarettes sold. But minimum pricing is not a tax. It is a law saying “you are not allowed to sell for less than this”.

That means that the extra cost is all profit for the off-licences, supermarkets, and pubs. Imagine a Supermarket that is buying in crates of beer at a fiver each, and selling them for 7.99. Right now, that supermarket is making 2.99 on every crate of beer. But under minimum alcohol pricing, the cost to the supermarket of that crate of beer does not rise – it is still a fiver. The only thing which rises is the price that they can sell it at. So, if “minimum pricing” puts the price up to a tenner for you and me, that money all goes straight into the pocket of off-licenses, pubs, and supermarkets. They are now making almost twice the profit, and nobody can compete with them, by law.

No wonder Alcohol Action Ireland brags that “pubs and supermarkets support this law”. Of course they do!

Incidentally, if you want to be amused, remember that “People before Profit” have thus far voted for this proposal at every step of the way, even though the main consequence of it will be to increase retail profits.

It tackles a problem that is solving itself anyway

The whole basis of Minimum Alcohol Pricing is the idea that Ireland is a nation plagued by alcoholism and problem drinking. The only thing is – that is not true. Alcohol consumption in Ireland has been falling, very dramatically, over the past twenty years:

Of course, the great paradox here is that an organisation like Alcohol Action Ireland can never admit success. If Alcohol Abuse were no longer a serious problem in Ireland, then there would not be a need for the taxpayer to fund Alcohol Action Ireland. If Poverty disappeared in the morning, there would be no need for the taxpayer to fund groups dedicated to combatting poverty. So, regardless of whether this law is necessary, or not, we can be fairly sure that in a year or two, Alcohol Action Ireland will declare that it did not go far enough. None of this is about evidence, or reality, in many ways. It cannot be, because the figures make clear that the problem is already going away, substantially, by itself.

It impacts the price twice.

As noted above, Minimum Alcohol Pricing is not a tax. The “price increases” all go into the pockets of the retailers. But those prices are subject to VAT. At the moment, if a retailer sells you a can of beer for a euro, they must charge VAT too – so the actual price they charge you is €1.21. But if Minimum Alcohol Pricing puts the price of that can of beer up to two euros, then the VAT is charged on the new price. That’s how Government gets its cut – instead of 21 cents in tax, they now get 42 cents. Everybody wins, in other words, except you, you poor sucker.

It distorts prices and pushes people towards harder drinks

Stats guy Harry McEvansonya, who was high up in the Green Party until they entered Government, ran some interesting numbers on the Minimum Alcohol Pricing proposal, recently, and this is what he found:

That’s right: Because of the way MUP distorts pricing, under this proposal it will be cheaper to buy one naggin of vodka than four cans of the cheapest beer. If you could choose, dear reader, what your teenager spends Friday night skulling down behind the bike sheds, which would you choose?

Note also, by the way, that wine is barely affected by this policy. It is mainly targeted at cheap cans of beer. You’d nearly think the objective was to target poor people, wouldn’t you?

It has no democratic legitimacy

This is in some way the least obvious point, which is why it is last in this list, but for my money it is also the most important.

Think back to the last General Election. How many times did you hear this idea discussed, or debated, or proposed, or opposed? The short answer is that you did not. This is not a policy that the public are crying out for. There is no great demand for it.

What has happened here is that the big business lobby – publicans, off licences, and supermarkets – have found common cause with taxpayer funded NGOs. This is a policy that benefits them directly, and they badly want it to pass. It takes money out of the hands of the public, and places it in the pockets of big business, to no discernable benefit. All that will happen, when this law passes (as it will) is that there will be an explosion in the cross-border alcohol trade.

In Scotland, when they introduced this policy, Supermarkets on the English side of the Scotland/England border made huge profits. As in Ireland, there was no great public demand for the policy.

One of the problems in Ireland is the extent to which policymaking has been captured by taxpayer funded NGOs. Alcohol Action Ireland was set up and funded by the Government for the express purpose of lobbying the Government on Alcohol policy. Think about that: They’re spending your money on an organisation that only has one job, which is to argue for higher prices for Alcohol.

The rest of the media, of course, are slow to make arguments against this law. After all, Supermarkets are some of their biggest advertisers.

The game is completely, and deliberately, rigged against the public on this one.


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