So it is with the cost of alcohol use to the government in England, including the NHS, the police, the criminal justice system and the welfare system. The Institute of Economic Affairs is a think tank that promotes free market economics; it has recently issued a discussion paper called Alcohol and the Public Purse. The IEA is not a source I'd normally quote, but it is undeniably influential and, as far as I know, not known for any bias concerning alcohol per se either way. Its author is Christopher Snowdon, a libertarian opponent of state intervention in matters such as alcohol, smoking and obesity.
The report runs to more than 40 pages, but some of its conclusions include:
- The £20 billion cost of alcohol use to the UK quoted by public health campaigners is "extremely misleading, conflating social and economic costs (most of which are paid by individuals and businesses) with the costs to government departments (the cost to the taxpayer)".
- "The best estimate of the gross annual cost of alcohol consumption to state-run services, including the Department of Health, the Department of Work and Pensions, and the Home Office, is £3.9 billion in 2015 prices. This consists £1,954 million to treat alcohol-related injuries and ill health, £1,626 million to tackle alcohol-related crime, and £289 million paid in benefits to those who are unable to work as a result of alcohol-related mental or physical health problems."
- The IEA has previously said UK alcohol duties should be halved to make them less regressive and bring them closer to duties elsewhere in Europe. This would raise a total of £5,206 million, more if sales went up as a result. Even if they didn't, government income would comfortably exceed government expenditure on alcohol-related problems.
Cutting duties isn't so unrealistic as it sounds, seeing that UK drinkers still pay 40% of the EU's entire alcohol tax bill, but we'd have to accept that it is politically improbable at present.
You can find the full report here.
Any argument to lower duties based on increasing sales of alcohol and thereby maintaining or increasing revenue for HMRC is bound to flounder.
ReplyDeleteReally enjoying this blog btw
I agree: there'd be a torrent of predictions of an an alcoholic apocalypse.
DeleteThanks very much; I'm pleased you like it.
Alcohol duties, like most taxes, are subject to a "Laffer curve" whereby there comes a point that the level of taxation starts to reduce not only consumption but the overall tax take.
ReplyDeleteI'd say we're still some way below that in terms of alcohol, but have passed it with tobacco, where over 30% of consumption is either smuggled or personal imports.
Halving alcohol duties wouldn't increase revenue, but on the other hand it certainly wouldn't cut it by anything like 50%, and would produce wider economic benefits.