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Pricing and Taxation

Despite extensive evidence that raising alcohol prices reduces overall consumption levels, the trend is that the real price of alcoholic beverages and the real value of alcohol taxation has been decreasing.

The real value of the EU alcohol minimum excise duty rates, and of Member States alcohol taxation, has decreased since the mid 1990s in most EU countries. In some countries alcoholic drinks have become more affordable by 50%.

Studies have shown statistically significant associations between alcohol consumption and three indicators of harm: fatal traffic accidents, (non- fatal) traffic injuries and liver cirrhosis.

Current excise duties vary for different alcoholic products; this means duty does not always relate directly to the amount of alcohol in the product. In addiction an increase in the duty levied does not necessarily translate into a price increase- retailer or producers may absorb the cost.

There is now a significant body of evidence that has examined the policies that are most effective in reducing alcohol-related harm.

A review of 32 alcohol strategies and interventions has found that in terms of the degree of effectiveness, the breadth of research support, the extent to which they have been tested cross-culturally, and the relative expense of implementation, the most effective alcohol policies include regulatory interventions (controls on price and availability of alcohol); brief interventions for hazardous and harmful drinkers; and drink-driving laws.

Minimum Pricing

Minimum pricing is a ‘floor price’ beneath which alcohol cannot be sold and is set based on the amount of pure alcohol in a product measured in units or grams so the more grams of pure alcohol in a bottle/can, the higher the price.

The relationship between alcohol price, consumption and harm is the foundation on which the policy of minimum pricing is built.

Minimum pricing has been favoured by health advocates as an effective strategy to address the growing health crisis that has resulted from the increased affordability of alcoholic beverages in some countries where supermarkets and shops are using cut price alcohol to attract customers.

Minimum pricing guarantees an effect on shelf price, it relates price to alcohol content, and it is simple to apply. Large retailers cannot simply absorb price increases as can happen with other pricing policies.

Key EU Documents

Directive 92/83/EEC the alcohol structures directive

Council Directive 92/83/EEC- on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages

This directive is intended to ensure a harmonised structural basis to the alcohol duties, it defines the alcohol products that are subject to excise duty. Details the methods by which duty must be charges, it also provides exemptions from duty and gives Member States the discretion to provide reduced rates in certain circumstances (small producers, certain products and geographical regions)

Council Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages

This Directive is aimed at approximation of minimum rates, the original proposal in 1993 was for the harmonisation of both structures and rates. However, while structures were generally harmonised agreement on full harmonisation of rates was not plausible. Final directive specified minimum rates with which Member States must comply, they have freedom to set the rates at the levels they deem appropriate on condition that the minimum rates are complied with.

Current Minimum Rates

Beer

0.748 euros per hectolitre/ degree Plato or 1/87 per hectolitre/degree of alcohol

Intermediate product

45 euros per hectolitre of product

Ethyl Alcohol

550 euros per hectolitre of pure alcohol

Wine and fermented beverages

Zero

Publications and Resources

The affordability of alcoholic beverages in the EU.

RAND Europe, 2009. Report commissioned by DG SANCO. It analyses the link between alcohol affordability, consumption and harms

Optimal alcohol taxation: stimulation results in Estonia

The aim of this paper is to empirically estimate the optimal level of alcohol taxes for Estonia on externality as well as fiscal grounds.

Indrek Saar. Estonian Academy of Security Sciences, Kase 61,12012 Tallin, Estonia

Further study on the affordability of alcoholic beverages in the EU.

RAND Europe, 2012. The study focus especially on excise duty pass-through, on- and off-trade sales, price promotions and pricing regulations

Study analysing possible changes in the minimum rates and structures of excise duties on alcoholic beverages

London Economics, 2010, Study analysing possible changes in the minimum rates and structures of excise duties on alcoholic beverages

Report to EC DG Taxation and Customs Union. The study provides (i) an assessment do the current burdens of taxation and economic relationships between the different types of alcoholic beverages in different Member States (ii) an assessment of the economic impact on the particular beverages and on the different Member States of potential changes to the alcohol directives compare to the current status quo.

Alcohol affordability and cross border trade in alcohol

Swedish National Institute of Public Health, 2009, Alcohol affordability and cross- border trade in alcohol

Commissioned by the Swedish Ministry of Health and Social Affairs to the Swedish National Institute of Public Health and further delegated to the Finnish National Institute for Health and Welfare. This report was discussed at the Expert conference on Alcohol and Health in Stockholm in September 2009 during the Swedish presidency of the European Union.

Eurocare Press Releases

18/07/2013

UK Government bows to industry pressure and abandons plans for minimum alcohol price

Britain’s Government has yesterday announced that it will not be taking forward proposals to introduce MUP at this time, but it would be legislating to ban sales below the cost of duty plus VAT.

02/07/2013

Cheaper beer in Denmark – How many lives will be lost?

The Danish government cut the beer tax by 15% on the 1 July and made alcohol more affordable for not only its own population, but also the neighboring countries like Sweden and Norway (that have higher taxes).

03/05/2013

Eurocare strongly supports Court's judgment on Minimum Unit Pricing for alcohol in Scotland

The Court of Session, Scotland's supreme civil court, has ruled today in favour of the legality of the Scottish government's plans to introduce minimum pricing per unit of alcohol.

18/02/2013

Sharp drop in alcohol-related deaths follows minimum alcohol price increase

An increase of minimum price of alcohol by 10 percent lead to a 32% reduction in alcohol-related deaths according to a study published today in Addiction.

07/12/2012

French beer tax - a step in the right direction

The French government has increased tax on beer by 160%, which is a step in a right direction that will help to address alcohol related harm and improve public budget.

News

07/02/2014

Under the influence: Scotland’s battle over alcohol pricing

This week the alcohol industry heads back to court in its latest attempt to overturn the introduction of minimum pricing in Scotland. Jonathan Gornall investigates how it has tried to influence opinion.

22/01/2014

Strong evidence for public health benefits with taxes on alcohol

OECD released a new Health Working Paper on fiscal policies in December 2013, which concludes that the arguments in support of taxes being used to attain public health objectives are strong for tobacco products and alcoholic beverages.

12/12/2013

Report shows support for minimum alcohol pricing in the UK

Eurocare member- the Institute of Alcohol Studies (IAS) has published an analysis of submissions to the Home Office consultation on minimum pricing that indicates public support for the policy was greater than previously thought.

28/11/2012

European Commission asks UK to abstain from introducing minimum pricing

The European Commission has disclosed its opinion on MUP and has asked UK to refrain from introducing such a measure in Scotland.

23/10/2012

The battle over the introduction of minimum pricing in Scotland continues

European Commission has expressed concerns and a number of EU Member States have raised objections

25/09/2012

Italy and Bulgaria first to complain against alcohol minimum pricing

Several countries have now have lodged its objections to the minimum pricing of alcohol proposed by the UK earlier this year.

03/09/2012

Eurocare stresses the importance of minimum pricing on alcohol beverages

Eurocare fully supports the planned introduction of minimum pricing in Scotland and similar plans by other governments within the United Kingdom.

28/08/2012

Eurocare strongly supports the introduction of minimum pricing in Scotland

The UK Government has notified the European Commission about Scotland’s intention to introduce a 50 pence minimum price for alcohol.

24/05/2012

Study on the affordability of alcoholic beverages in the EU

The European Commission DG SANCO has published a study on the affordability of alcoholic beverages in the EU, with a focus on excise duty pass-through, on- and off-trade sales, price promotions and pricing regulations.

14/05/2012

Scottish minimum price at 50p per unit

The preferred minimum price for alcohol will be 50p per unit, it was announced today by the Scottish Government.

13/02/2012

European Commission says minimum pricing on alcohol is not impossible

In a recent answer to a questions regarding minimum pricing by a Scottish MEP George Lyon, the European Commission has shed some light on the ongoing debates.

07/12/2011

Excise duty restoration could have earned the Government €178million

Source: Alcohol Action Ireland

Alcohol Action Ireland, today branded the Government’s decision to keep alcohol excise duty at the same slashed levels as the previous Government’s budget as “incomprehensible”