Leave alcohol taxes alone until the hangover clears from minimum unit pricing

The alcohol manufacturing industry has cranked up its perennial campaign for a budget cut in the excise charged on drink. Ireland’s alcohol excise rates are the second highest in Europe and the industry has, without success, lobbied successive governments for almost a decade for a reduction.

The industry, via the manufacturer-dominated Drinks Industry Group of Ireland, is now calling for excise to be cut by 15 per cent over two years. The first step in next month’s budget, it suggests, should be a 7.5 per cent reduction. In alcohol terms, that is what you might call half-cut.

The Government would be wise to ignore the industry’s campaign for this year at least, and probably the next two after that. Equally, it should also ignore calls from the anti-drinking lobby for a budget levy on the industry.

Ministers should leave all alcohol taxes well enough alone until the full impact of alcohol minimum unit pricing, which was introduced only in January, can be fully assessed. Only then can a proper debate be had on the true efficacy of the pricing policy as an instrument to reduce the most egregious effects of problem drinking, which, after all, was the basis upon which the policy was thrust upon us all — problem drinkers and recreational tipplers alike. No other basis should be used to judge it.

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Do not listen to the loudest voices on either side of this debate. There simply is not enough data yet to conclude whether or not minimum unit pricing is working when measured against its stated public policy objectives. But that data will come in time. When it does, the policy should stay if it can be shown to have reduced harm among the worst of problem drinkers.

[ Minimum unit alcohol pricing takes effect countrywide ]

[ Minimum prices for alcohol fail to curb intake by most vulnerable, study finds ]

But if it can be shown that the policy is not having the desired effect of reducing the worst of problem drinking, the Government should not be afraid to scrap it altogether, regardless of the wall of opposition this inevitably would generate from some of the medical profession and anti-drink campaigners.

Early data from Scotland, although still far from conclusive, appears to suggest that its minimum unit pricing experiment is not having the desired effect in restraining the excesses of its most inveterate drinkers. A study recently published in British Medical Journal Open suggested minimum unit pricing may actually be making life even harder for some vulnerable groups, such as alcoholic men who also live in poverty.

Scotland is 3½ years deeper into its minimum unit pricing policy than Ireland. But if some of those early Scottish findings are replicated here in time, the policy should be torpedoed. In such a scenario, it might even make sense not to cut excise but to hike it further and couple this with the abolition of minimum pricing.

If the Government still wanted to target cheap drink, it could raise excise

Minimum unit pricing was brought in to make cheap drink more expensive. But all the revenue from this increase went to retailers such as major supermarket groups, which all got to pump up their margins on booze in one fell swoop. It was like one big State-sanctioned cartel move. The exchequer got barely an extra penny, apart from a rise in the VAT collected on cheap alcohol as the tax is calculated on the selling price.

Yet excise is a volume instrument that is not calculated on the price of the drink being taxed, but rather on how much of it there is. Proportionally, it puts a heavier burden on cheaper drinks — the excise on a bottle of plonk is the same as a bottle of the finest Bordeaux. The excise on the cheapest paint stripper vodka is equal to what is charged on a bottle of Grey Goose.

If the Government still wanted to target cheap drink, it could raise excise. It might not be as laser-focused as an minimum unit pricing-like floor price. But at least the extra cash collected at the tills would flow to the exchequer instead of to the bottom line of supermarkets. Then it could be used to fund further health and poverty measures more targeted at those who were most discommoded by minimum unit pricing.

The downside of this approach, obviously, is that it would increase the price of a pint in the pub. The stated intention of policymakers with minimum unit pricing was never to target pub drinking. This is something that would have to be weighed in the round.

The key to understanding the effects of the policy on the industry, and also with regard to its original objectives, is to obtain clear, independent data. Campaigners on either side will always present the data in ways that suits their argument.

One example of this in Scotland where early indications that the policy had reduced the overall consumption of alcohol were initially presented by pro-minimum unit pricing campaigners as proof that it was working. But the recent British Medical Journal Open research suggests that, while it might be reducing overall consumption, it wasn’t necessarily reducing consumption among those targeted by the measure.

The alcohol industry is, of course, a vested interest in this whole debate. It is entitled to contribute its views, but people are entitled to assess its contributions through the prism of the industry’s self-interest. But some of the most vociferous campaigners for minimum unit pricing in Ireland have also, in a way, become partisan players in the debate over time.

Many of those campaigners will argue that they come at the issue purely from a public health perspective. But now that minimum unit pricing has already been brought in, it can be argued that they have developed a vested interest in seeing the policy that they fought so hard for, maintained. Everybody likes to be vindicated. When assessing the success of minimum unit pricing through how its impact correlates with its objectives, the zeal of the policy’s biggest cheerleaders means they are not necessarily neutral observers.

The good news for campaigners is that most research shows that overall alcohol consumption in Ireland is declining and this has been the case for two decades. It is borne out in Revenue’s statistics on the consumption of pure alcohol per head, for example. It is also obvious on the streets of every town and village in the State, where pub numbers have reduced by about one-fifth. And more young people are now teetotal than ever before.

Problem drinking has not gone away, of course. But let us wait for the data on minimum unit pricing on this issue before assessing its real impact. And let’s not muddy the waters with competing measures on alcohol, such as excise cuts or levies, until the true impact of minimum unit pricing can be seen at the bottom of the glass.