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Pricing and Taxation
Despite extensive evidence that raising alcohol prices reduces overall consumption levels, the trend is that the real price of alcoholic beverages and the real value of alcohol taxation has been decreasing.
The real value of the EU alcohol minimum excise duty rates, and of Member States alcohol taxation, has decreased since the mid 1990s in most EU countries. In some countries alcoholic drinks have become more affordable by 50%.
Studies have shown statistically significant associations between alcohol consumption and three indicators of harm: fatal traffic accidents, (non- fatal) traffic injuries and liver cirrhosis.
Current excise duties vary for different alcoholic products; this means duty does not always relate directly to the amount of alcohol in the product. In addiction an increase in the duty levied does not necessarily translate into a price increase- retailer or producers may absorb the cost.
There is now a significant body of evidence that has examined the policies that are most effective in reducing alcohol-related harm.
A review of 32 alcohol strategies and interventions has found that in terms of the degree of effectiveness, the breadth of research support, the extent to which they have been tested cross-culturally, and the relative expense of implementation, the most effective alcohol policies include regulatory interventions (controls on price and availability of alcohol); brief interventions for hazardous and harmful drinkers; and drink-driving laws.
Minimum Pricing
Minimum pricing is a ‘floor price’ beneath which alcohol cannot be sold and is set based on the amount of pure alcohol in a product measured in units or grams so the more grams of pure alcohol in a bottle/can, the higher the price.
The relationship between alcohol price, consumption and harm is the foundation on which the policy of minimum pricing is built.
Minimum pricing has been favoured by health advocates as an effective strategy to address the growing health crisis that has resulted from the increased affordability of alcoholic beverages in some countries where supermarkets and shops are using cut price alcohol to attract customers.
Minimum pricing guarantees an effect on shelf price, it relates price to alcohol content, and it is simple to apply. Large retailers cannot simply absorb price increases as can happen with other pricing policies.
Key EU Documents
Directive 92/83/EEC the alcohol structures directive
Council Directive 92/83/EEC- on the harmonisation of the structures of excise duties on alcohol and alcoholic beverages
This directive is intended to ensure a harmonised structural basis to the alcohol duties, it defines the alcohol products that are subject to excise duty. Details the methods by which duty must be charges, it also provides exemptions from duty and gives Member States the discretion to provide reduced rates in certain circumstances (small producers, certain products and geographical regions)
Council Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages
This Directive is aimed at approximation of minimum rates, the original proposal in 1993 was for the harmonisation of both structures and rates. However, while structures were generally harmonised agreement on full harmonisation of rates was not plausible. Final directive specified minimum rates with which Member States must comply, they have freedom to set the rates at the levels they deem appropriate on condition that the minimum rates are complied with.
Current Minimum Rates
| Beer | 0.748 euros per hectolitre/ degree Plato or 1/87 per hectolitre/degree of alcohol |
| Intermediate product | 45 euros per hectolitre of product |
| Ethyl Alcohol | 550 euros per hectolitre of pure alcohol |
| Wine and fermented beverages | Zero |
Publications and Resources
The affordability of alcoholic beverages in the EU.
RAND Europe, 2009. Report commissioned by DG SANCO. It analyses the link between alcohol affordability, consumption and harms
Further study on the affordability of alcoholic beverages in the EU.
RAND Europe, 2012. The study focus especially on excise duty pass-through, on- and off-trade sales, price promotions and pricing regulations
Study analysing possible changes in the minimum rates and structures of excise duties on alcoholic beverages
London Economics, 2010, Study analysing possible changes in the minimum rates and structures of excise duties on alcoholic beverages
Report to EC DG Taxation and Customs Union. The study provides (i) an assessment do the current burdens of taxation and economic relationships between the different types of alcoholic beverages in different Member States (ii) an assessment of the economic impact on the particular beverages and on the different Member States of potential changes to the alcohol directives compare to the current status quo.
Alcohol affordability and cross border trade in alcohol
Swedish National Institute of Public Health, 2009, Alcohol affordability and cross- border trade in alcohol
Commissioned by the Swedish Ministry of Health and Social Affairs to the Swedish National Institute of Public Health and further delegated to the Finnish National Institute for Health and Welfare. This report was discussed at the Expert conference on Alcohol and Health in Stockholm in September 2009 during the Swedish presidency of the European Union.
Optimal alcohol taxation: stimulation results in Estonia
The aim of this paper is to empirically estimate the optimal level of alcohol taxes for Estonia on externality as well as fiscal grounds.
Indrek Saar.Estoniana Academcy of Security Sciences, Kase 61,12012 Tallin, Estonia
News
European Commission asks UK to abstain from introducing minimum pricing
The European Commission has disclosed its opinion on MUP and has asked UK to refrain from introducing such a measure in Scotland.
The battle over the introduction of minimum pricing in Scotland continues
European Commission has expressed concerns and a number of EU Member States have raised objections
Italy and Bulgaria first to complain against alcohol minimum pricing
Several countries have now have lodged its objections to the minimum pricing of alcohol proposed by the UK earlier this year.
Eurocare stresses the importance of minimum pricing on alcohol beverages
Eurocare fully supports the planned introduction of minimum pricing in Scotland and similar plans by other governments within the United Kingdom.
Eurocare strongly supports the introduction of minimum pricing in Scotland
The UK Government has notified the European Commission about Scotland’s intention to introduce a 50 pence minimum price for alcohol.
Study on the affordability of alcoholic beverages in the EU
The European Commission DG SANCO has published a study on the affordability of alcoholic beverages in the EU, with a focus on excise duty pass-through, on- and off-trade sales, price promotions and pricing regulations.
Scottish minimum price at 50p per unit
The preferred minimum price for alcohol will be 50p per unit, it was announced today by the Scottish Government.
European Commission says minimum pricing on alcohol is not impossible
In a recent answer to a questions regarding minimum pricing by a Scottish MEP George Lyon, the European Commission has shed some light on the ongoing debates.
Excise duty restoration could have earned the Government €178million
Source: Alcohol Action Ireland
Alcohol Action Ireland, today branded the Government’s decision to keep alcohol excise duty at the same slashed levels as the previous Government’s budget as “incomprehensible”