From City AM:
NEW RULES pushing up the price of alcohol will affect almost half of drinks sold at off-licences and hit moderate drinkers, a study by the Institute for Fiscal Studies claims... However, analysis of off-licence sales by the IFS shows 47 per cent of units of alcohol sold will be affected by the minimum price... The minimum price is also being implemented in an inefficient manner, the think-tank warns.
"The policy could also lead to substantial transfers of revenue to the alcohol industry. It would seem more sensible to establish a floor price through the tax system by treating different types of alcohol more consistently, and allow these revenues to flow to the exchequer instead."
However, the Home Office rejected that view, telling City A.M. "alcohol sold at a loss benefits the heaviest drinkers and costs the rest of us (1). Supermarkets can use any extra profits to lower the price of other goods and make the average shopping basket cheaper."(2)
1) No it doesn't. Even if sold at a loss (for which I have seen no evidence), the alcohol duty is still being paid, and that's what goes into the pot for "the rest of us". Admittedly VAT receipts from below-cost booze are lower, but VAT is an indescribably shit tax anyway.
2) Can anybody explain what would motivate supermarkets to do that?
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6 comments:
1) This is the question I keep asking: where is all this cheap booze? I never see any!
2) I suppose the supermarkets have intense competition so may transfer any loss leader offers to other allegedly price "aware" products. Remember the great baked bean price war?
This has just occurred to me:
If I bring a bottle of wine to a dinner party, am I to be required to charge the recipients 40p per unit? And if not, what is to stop an evil megacorp retailer from giving a tin of beer to each customer as a gift if it so wishes?
BE 2) supermarkets might well do this; but a loss leader always means that they are over-charging for something else. Second comment, yes of course, this is always the dilemma with cartels, but in this instance, the cartel members (supermarkets) will have the forces of the state on their side to ensure compliance.
See also my caricature of yesterday evening.
"Supermarkets can use any extra profits to lower the price of other goods and make the average shopping basket cheaper."
In Polutopia, supermarkets always behave like that. Shame we don't actually live there.
The gift problem is a good one. I can see tombola stall operators being taken to court for "selling" bottles of whisky at less than the minimum price, along with the donor of the bottle of whisky. If gifts don't count, where do the supermarkets stand with BOGOF offers? As usual, they haven't thought this one through.
It really wouldn't be very difficult to change alcohol duty so that it was levied per unit, rather than per litre, with differing rates for differing strength bands, which would have exactly the same effects, but without the gains for the alcohol trade.
B, that's exactly what the sensible IFS said.
I can see the old boy network at work here - cue the blue Lord Sainsbury: "George old boy, we would much rather you imposed a minimum price rather than monkey around with the duty and what's good for us is good for the Party, doncher know?"
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