Today the European Court of Justice ruled that minimum alcohol pricing is contrary to EU law if other tax options exist.
A legal challenge was brought by the SWA, which argued the Scottish government’s legislation breached European law.
The European court ruling said: “The Court of Justice considers that the effect of the Scottish legislation is significantly to restrict the market, and this might be avoided by the introduction of a tax measure designed to increase the price of alcohol instead of a measure imposing a minimum price per unit of alcohol.”
It added: “The court states that it is ultimately for the national court to determine whether measures other than that provided for by the Scottish legislation, such as increased taxation on alcoholic drinks, are capable of protecting human life and health as effectively as the current legislation, while being less restrictive of trade in those products within the EU.”
Scottish Liberal Democrat leader Willie Rennie called for an emergency summit to review options:
This is a blow to the campaign to cut Scotland’s unhealthy levels of alcohol consumption. It wrecks our health and families.
Liberal Democrats backed the plans to introduce minimum unit pricing and now call on the UK and Scottish Government to hold an emergency summit to agree a new plan using all powers both reserved and devolved.
The drinks industry must step up too, especially as they have been the block to the introduction of this measure. The years invested in this must not be wasted.
Gareth Epps, who understands the pub industry due to his involvement in the Fair Deal for your Local campaign has some suggestions for a way forward on his blog.
The IFS suggests reforming tax on wine and spirits to be by unit. This would not affect the price of most products, particularly Scotch whisky, but (they think) would have a beneficial overall effect on excessive drinking.
There is something in what they are saying, if only they would address the disparity between on- and off-trade tax too. Alcohol consumed in a supervised environment (a pub) is less likely to lead to health or crime concerns, after all. But the UK Treasury doesn’t understand that.
There is one last catch. Just about any change to alcohol tax needs a change to EU law. So why not not bite the bullet and deal with all these problems together?
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21 Comments
What a festive message. Lib Dems say poor people should pay more for their drinks
Can Gareth explain why taxing all alcohol per unit needs a change to EU law. We charge duty at 57.95p per litre on petrol and diesel for road transport (and VAT on the duty as well), which is more than other EU countries. Why cannot a decision to charge duty on alcohol by the unit (plus VAT) be something that is dealt with under the principle of subsiduarity?
The one downside I could see would be a renaissance of ‘booze cruises’.
Are we as a ‘problem solving’ liberal democratic party really quite sure that we know with sufficient certainty what the underlying causes are of different levels of alcohol consumption across the UK … and Europe ? One can have many hypotheses but the research data is key. If there is no adequate research data then we should be calling for a proper open-minded non-prejudicial study… and not just about Scotland. Has the idea of minimum prices (and thus higher profits) been examined for effectiveness at reducing consumption amongst heavy drinkers in the light of these probable causes ? This is key to taxation policy too. For example, do higher profits lead to heavier advertising ? On the surface of it, this may represent poor policymaking. However, I may be wrong and the minimum price policy may have been carefully researched.
I think the ECJ has overreached itself.
Nearly five years ago I received a liver transplant at Edinburgh Royal Infirmary. It was non-alcohol related – BUT – one inevitably gets to know and experience a great deal about liver disease and the impact alcohol consumption has on it, One also gets to know folk who suffer liver disease that is alcohol related.
I was very lucky and will forever be grateful to the wonderful team at the ERI. – and also to the organ donor family. It was a harrowing experience to witness the deaths of less lucky patients – many of whom suffered from alcohol related liver disease. I will never forget seeing the sheet covered trolleys being wheeled out of the ward in the middle of the night..
I’m delighted that my friend Willie has taken this initiative – just as he took the initiative on Minimum Pricing at Conference a couple of years ago. It reflects well on him to reject the siren voices of the whiskey trade who, I know, influenced a former Liberal Democrat MP (now in the HOL) to campaign against the spirits escalator in the last budget.
@ Simon McGrath I’m afraid I find Mr McGrath’s comments somewhat lacking – especially given the BBC News headline just two days ago : “A&E visits for alcohol poisoning ‘double in six years”. I’m sorry Simon, look it up and please do a bit of research into this human misery and the cost to the NHS and society.
@ Paul Reynolds ; You quite rightly call for evidence. Follow the link below on the Sheffield University research commissioned by the Scottish Government on the impact of minimum pricing. If it has to be a tax rather than Minimum Pricing – then the UK Government should wake up – ignore the vested interests cashing in on the poisoning of so many people – and follow the evidence. If they don’t – they may well persuade some of us by default.that an independent Scotland needs to be re-considered.
Here’s the link for the research evidence, Paul :
Model-based appraisal of alcohol minimum pricing
https://www.shef.ac.uk/polopoly_fs/1.156503!/file/scotlandjan.pdf
University of Sheffield – Alcohol Minimum Price Modelling Research: Second Update. 1. MODEL-BASED APPRAISAL OF ALCOHOL. MINIMUM PRICING . If you can’t get make the link work – then Google it….
Setting legally obligated pricing levels has always been the kind of thing that the EU looks pretty unkindly on. None of us are lawyers in this space, but this ruling is hardly a surprise. We can’t both ask for free access of British goods and services on a free market and simultaneously demand the right to artificially intervene. We risk looking like the substantial number of British people who want free movement in the EU for British people but not for anyone else.
Well since the Scottish govt can’t raise taxes on alcohol, it stands to reason that they should be able to introduce minimum pricing. As it’s the only power that they can use to tackle this problem, it’s clearly proportionate.
Hopefully the Scottish courts will agree on this.
I want to do produce a more detailed write-up of this work. Lawrence is wrong to talk about ‘booze cruises’, as tax levels on alcohol across the EU have gradually caught up with the UK’s much higher tax levels.
On the law Peter Bancroft is broadly right. To quote specifically from the IFS: “The structure of alcohol excise taxes is partly restricted by an EU Directive that sets out that the tax base for wine and cider should be the volume of liquid, whereas the base for spirits and beer is the alcohol content. 7 It is hard to think of any reasonable or defensible economic justification for such a policy. Nevertheless this acts as a legal constraint on the ability of government to implement the sort of reform to excise taxes [they suggest].
They add that this policy is particularly poorly designed to tackle problem drinking. Now you can either take the absolutist libertarian position posited by Mr McGrath, in which people can drink [and presumably smoke] themselves to death free from any state intervention, ignoring the colossal harm done to families from such a policy. Alternatively, you can do something about reducing that harm which protects jobs too.
The evidence (suggested by David Raw among others) is that minimum pricing is an imperfect solution to a very real problem. The key additional evidence is that over 25 years, alcohol prices in supermarkets have fallen by 20-30 per cent in real terms while the on-trade has endured price rises by the equivalent amount. Some of this is to do with the restrictive practices around the pubco tie that Simon McGrath wishes to see continue but where Parliament has backed the Fair Deal for your Local campaign led by Greg Mulholland and I and reform is on the way. But part of it is about taxation. Banning supermarket loss-leaders (as Scotland has done but not England) is only really scratching the surface. A proper look at the evidence base, as Paul Reynolds suggests, is needed to reform the taxation system. It is timely that the issue has come up now as the EU is reviewing its directive on alcohol tax. If Willie Rennie is right to call for a summit, that is the reason.
The irony of the failure to bring in minimum pricing is that the Scottish Liberal Democrat M.P.’s not only voted, but actually lobbied, for the spirit duty escalator to be abolished in the last Coalition budget. The chief protagonist was the then Malcolm Bruce M.P. It is thus difficult to know what alternative to minimum pricing is now available. by the UK Government. dominated as it is by vested interests. Nevertheless it is refreshing to see Willie’s efforts to redress the situation now.
I must confess to being extremely angry last March because I believed it was a disastrous move that would damage public health and the NHS budgets in order to satisfy commercial interests.
The case against abolishing the spirit duty escalator can be found in the following link from Alcohol Health Alliance UK.
The importance of maintaining the Alcohol duty escalator – IAS
http://www.ias.org.uk/…/AHA%20Briefing%20-%20The%20importance%20of...
They key points are :
Key Points
• The alcohol duty escalator is appropriate and fair, and maintaining an upward trend in alcohol duties will be beneficial to the economy, society and public health
• Scrapping the Alcohol duty escalator would unfairly increase the burden on the public purse thus putting even more pressure on public services and frontline workers.
• Reducing the affordability of alcohol is internationally recognized as one of the most effective ways of addressing alcohol harm.
• Alcohol is 61% more affordable than it was in 1980, and in the UK alcohol affordability has increased significantly more than most other EU countries in recent years
• Ending the duty escalator will further weaken the ban on below cost sales: Current proposals mean strong white cider can be sold for 6p per unit and distilled spirits for 32p – we can’t afford for cheap drink to get cheaper
• UK wine and spirits consumption is at record levels, and among young women aged 16-24 the proportion of spirits drinkers is now larger than any other demographic group.
• The duty escalator isn’t bad news for all businesses – a decrease in drinking levels doesn’t necessarily mean job losses and raising taxes on wine and spirits may help boost the pub trade
Scandinavian countries, particularly Norway and Sweden, have always taxed alcoholic drinks massively. I remember paying the equivalent of £1 for a bottle of lager in Oslo in 1966 ( when 10/- would have given you a good night out back home). Prices appear to have kept up with inflation as well. So, I wonder what this has done to the levels of alcoholism in those countries. Mind you, the nights are long over there, aren’t they?
@Gareth Epps
“Now you can either take the absolutist libertarian position posited by Mr McGrath, in which people can drink [and presumably smoke] themselves to death free from any state intervention, ignoring the colossal harm done to families from such a policy. Alternatively, you can do something about reducing that harm which protects jobs too.”
Simon McGrath may possibly have “posited” that position elsewhere, but he didn’t here.
He merely said that there is a danger that this policy could be represented as “Lib Dems say poor people should pay more for their drinks”.
It’s ironic that many Lib Dems (I don’t know whether that included you and your colleagues in the “Liberator Collective”, Gareth) complained about raising the VAT standard rate from 17.5% to 20%, claiming that it hit the poor. In contrast I and others pointed out that the IFS explained that the VAT change was actually “mildly progressive”.
I’m fairly certain that these proposals on alcohol are actually highly regressive (is anyone aware of any research on this point?) – which doesn’t mean that they are necessarily wrong. I just think, like Simon McGrath appears to do, that it’s a good idea to think through all the implications.
I shall ignore the impolite personal comments from Simon Shaw.
John Marriott raises Scandinavia. It is a fair comment, but only the anti-alcohol lobby would suggest raising taxes to those levels. Is there any evidence that they reduce alcohol-related disorder and health problems? I’m not aware of any (but am happy to be put right).
That same anti-alcohol lobby is cited by David Raw who talks about the duty escalators. All they do is cost jobs in the UK. One of the few things George Osborne did that I heartily agree with was abandoning the beer duty escalator. Why? Because it made no difference to disorder or harm reduction, and he actually looked at the evidence that said it was costing the Treasury more in reduced revenue than the increased duty was bringing in. Subsequent evidence suggests abandoning the beer duty escalator has saved several thousand jobs, which is surely a good thing given the 250,000+ people working in the pub and brewing sectors in the UK.
This is an illiberal and ill-thought-out ruling. A tax measure would hit all the alcohol industry including those who couldn’t afford to offer cut-price booze (pubs generally, small producers) and supermarkets could still offer loss leaders which would encourage heavy drinking. That is unless the tax was only on very cheap alcohol, in which case this would be a ridiculously admin-expensive and roundabout way of achieving the same end result. Is an appeal possible?
@Gareth Epps
“I shall ignore the impolite personal comments from Simon Shaw.”
I think your problem is a major lack of self-awareness, Gareth.
Just try to avoid making sarky comments about other Lib Dems (and I’m not talking about me) and you’ll be fine.
Unless, of course, Lib Dem member Simon McGrath did “posit” somewhere all those things you accused him of.
Minimum alcohol pricing is a regressive tax. Surely there are other ways to reduce consumption? I’ve often thought drinks stronger than 37.5% or 40% should be banned. More education could be good too.
PS, I’m against loss-leaders and Buy-One-Get-One-Free though. Let’s just be careful. Of course, offering discounts before things go past their sell-by date is fine.
We can’t be driven by a desire to hit big businesses and their employees. It all needs to be about the public good. The way to hit big business is through corporation tax, not indirectly through as many regulation as possible in all areas of business law.
I don’t always agree with Eddie Sammon but he is not wrong in what he says (minimum pricing is not a tax though.)
The Scotch whisky industry would be up in arms if you simply banned stronger spirits, as it would include various premium whisky. And as a Liberal I am not instinctively in favour of banning things, especially without evidence.
One change that the Treasury could make, entirely separate from minimum pricing, is on cider duty. If you defined ciders by apple content, you could at a stroke separate out quality farmhouse ciders from chemical ‘white lightning’-style super strength drinks that are generally not consumed responsibly.
“Now you can either take the absolutist libertarian position posited by Mr McGrath, in which people can drink [and presumably smoke] themselves to death free from any state intervention, ignoring the colossal harm done to families from such a policy”
Where did I say that ?
@ Simon McGrath “Where did I say that?”
Quite right Simon, your comments were far less sophisticated and well informed.
Speak for yourself!
After a load of comments irrelevant to the topic, some interesting analysis of the issues here:-
http://www.scotsman.com/business/bill-jamieson-minimum-pricing-maximum-fuss-1-3985228