Writing in the British Medical Journal, Dr Nick Sheron suggests that
"VAT is already levied differentially on food and drink; more VAT is charged to drink coffee on the premises than to take it away. If this policy was applied to alcohol but was reversed – say, for example, reducing the VAT for on-sales from 20% to 12% – it would be possible to increase the rate of duty to compensate for this without increasing the price of alcohol in pubs."
He said public health would improve as a result and the pub industry would be supported at the same time. This would be a way around the minimum price per unit of alcohol policy that is unpopular with ministers.
According to the Department of Health, setting a minimum price of 30 pence per unit would prevent 300 deaths a year, 40 pence about 1000, and 50 pence more than 2000. Therefore as Dr Sheron notes ""For someone consuming 15 units a week, the difference between 30 and 40 pence a unit is £1.50, whereas my patients with alcohol related cirrhosis consume a mean of 100 units, and in some cases up to 400 units a week—a difference of £10 and £40. This would have a substantial impact."
This inspired idea would deal with the massive problem of alcohol misuse, much of which is related to low priced supermarket sales, and which costs the UK economy between £20billion and £55billion every year. It also causes around 40,000 deaths and 863,300 hospital admissions.
It is an “out of the box” idea that would have the public health benefits of reducing consumption, improving public health and bring in revenue for the government. At the same time, it could help local pubs if VAT were applied at a lower rate to the industry.
One can only hope that this Government is radical enough to consider such a suggestion. Indeed, if I were George Osborne and Andrew Lansley, I would have my diary secretaries setting up a meeting with Dr Sheron immediately.
Comments
There are many overheads which mean that alcohol bought in pubs is more expensive - Bar staff and maybe door staff need to be paid, glasses need to be provided, and washed, and replaced, as must furniture etc., often music is provided; licensing laws and often brewery costs must be considered, there is also the cost of heating and lighting the premises. Depending on what types of drink the pub sells there may also be much higher storage costs.
In short VAT is not the driving factor, and pubs will not be able to compete with supermarkets on price even if they pay a lower rate of VAT.
Maybe we should consider a more hard-line solution - like that adopted in Australia where alcohol sales are restricted to Off Licences and Pubs?
We also need to remember that the root causes of alcohol related problems are far wider than the price of alcohol.