Rise in tax on alcohol 'a better means' of cutting consumption

The Government should increase alcohol taxes rather than re-introduce a ban on below-cost selling if it wants to curb excess drinking habits through higher alcohol prices, according to the Competition Authority.

Raising excise duties on drink would be "a better means" of cutting alcohol consumption than preventing retailers from selling alcohol at below-cost prices or setting minimum prices, the authority has told an advisory group set up by Minister for Justice, Equality and Law Reform Brian Lenihan.

Supermarkets, convenience stores and off-licences have been able to sell alcohol at below-cost prices since the abolition of the Groceries Order in 2006 and many have since used special loss-leading promotions in order to attract customers. But the idea that "buy one get one free" or "50 per cent off" special deals encouraging moderate drinkers to binge drink or binge drinkers to drink even more than they would otherwise is "entirely theoretical", the submission states.

Competition Authority chairman Bill Prasifka said a ban on below-cost selling would "clearly be bad" for consumers and would actually make the sale of alcohol more profitable.

"It is not surprising that the loudest calls for the re-introduction of the Groceries Order for alcohol have come from the licensed trade," Mr Prasifka said.

The price of alcohol in off-licences has dropped since the abolition of the ban on below-cost selling and may have contributed to a dramatic shift toward home drinking and away from drinking in pubs.

But it has not led to an increase in overall alcohol consumption, the Competition Authority said.

The authority's recommendation that the Government should increase excise duties follows the Health Service Executive's call last November for a 10 per cent increase in excise duties, which it said was necessary in order to reduce alcohol-related health problems and the social harm caused by excess drinking.

Excise duty on beer has not increased since 1994, while cider duty was raised in 2001 and the tax on spirits increased in 2002.

The drinks industry is strongly opposed to any tax increases and says the Republic already has the highest taxes on wine and beer and the second highest duties on spirits and cider in Europe.

About 30 per cent of the price of a pint in a pub goes to the Government in the form of taxes, while almost two-thirds of the price of a bottle of whiskey in an off-licence is tax.

A spokesman for the Drinks Industry Group of Ireland, which represents the licensed trade and drinks manufacturers, said it had sought an exemption for alcohol when the Groceries Order was abolished because it had anticipated that it would lead to the availability of cheap drink. But it also disputes links between prices and drinking patterns.