Minimum pricing for alcohol would land retailers £700m

28 September, 2010

The introduction of a minimum price for alcohol in Britain could see retailers and manufacturers reap £700m in extra revenue.

The findings published today by the Institute of Fiscal Studies (IFS) are based on a minimum price of 45p per unit, an idea floated by the Scottish government before being rejected by opposition parliamentary ministers last week.

In the report the IFS suggests that an increase in alcohol taxation would be an alternative way to tackle excess drinking, at the same time as providing much needed tax revenue.

Andrew Leicester, a senior research economist at the IFS and one of the authors of the research, said: “The government should seek to change European regulations on how alcohol taxes can be structured, so that taxes can mimic the impact of minimum prices whilst ensuring the resulting revenues go to the government and not firms.”

The research shows that the major beneficiaries of minimum pricing would be the stores that sell the most alcohol and those that sell at the cheapest price.

As the largest UK alcohol retailer, Tesco would see an increase in spending of 9%, should a minimum price of 45p per unit be introduced, while Asda, although alcohol revenues are lower in cash terms, would experience an 11% rise.

The findings follow chief executive of Tesco, Terry Leahy’s backing of minimum pricing. In an open letter earlier this year to The Daily Telegraph he “welcomed the new government’s commitment to act on below-cost selling” and pledged to “support any future discussions on a minimum price for alcohol”.





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