By Peter Rice
Regardless of what happens with alcohol duties in today’s Budget, it is unlikely that SNP votes will be crucial to the outcome. It is nonetheless important that, in an Agenda article, SNP MP Brendan O’Hara wrote in support of the Scotch Whisky Association's (SWA) call to reduce spirits duty and the rest of the party appears to be in support.
It’s important and surprising in view of the SNP’s longstanding acceptance of the importance of alcohol price on the rates of harm individuals and families experience from alcohol. This analysis has been a keystone of Scottish Government policy for the past eight years. At the Global Alcohol Policy Conference in Edinburgh last year, the First Minister emphasised that Scottish Government policy has been based on the best international evidence, in line with the World Health Organisation’s advice, and Nicola Sturgeon received plaudits from the assembled academics and campaigners. Mr O’Hara’s position undermines that approach and some of the progress made in reducing alcohol harm in Scotland.
A duty cut that reduces the price of the high-end malts Mr O’Hara writes about reduces the price of all spirits. Vodka has outsold whisky for many years and cheap vodka together with white cider, dominates the consumption of patients seen in our clinics, hospital beds and A&E departments. A price reduction of 15p a bottle will be more significant to the heavy consumers of these products than the “sensible moderate drinkers” Mr O’Hara referred to.
Why would the SWA support a measure whose impact is likely to be greatest at the other end of the market from the brands it champions? The spirits industry is dominated by a few conglomerates with just as much interest in vodka as whisky. When discussing the SWA’s opposition to Minimum Unit Pricing (MUP), Alex Salmond, then First Minister, said : “I do not believe the Scotch Whisky Association’s motivation is about whisky, it’s about cheap vodka. They say not, but I do not find their arguments convincing.” I think he was right and that the same motives are still at play, with the SWA acting as the respectable face of the broader spirits industry.
An argument that a duty cut will benefit “sensible” drinkers while no attention is paid to the impact on the consumption of the heaviest drinkers is disingenuous. The organisation I chair, representing the Scottish Medical and Nursing Royal Colleges, has championed MUP since 2007. MUP legislation passed without opposition in Holyrood almost four years ago and has been tied up in legal red tape by the Scotch whisky industry since. We proposed MUP because it was the best targeted measure to affect the cheapest products overwhelmingly consumed by the heaviest drinkers who experience the greatest harm. Raising excise duties is a less targeted measure but it does produce health benefits and is complementary to MUP.
Institute of Fiscal Studies analysis shows that spirits duty is around 30 per cent less in real terms than in the early 1980s and that alcohol duties' contribution to total tax take has reduced sharply over the same period. After a 10-year reduction in duty, Alistair Darling introduced in 2008 a system to increase alcohol duty rates year on year: the alcohol duty escalator. George Osborne scrapped it in 2014. Between 2008 and 2014, there were substantial falls in in alcohol deaths, a trend we have seen reverse in the past two years since the end of the duty escalator. Alcohol price is a very important factor in determining alcohol harm and alcohol duties are a key element.
According to the industry, tax represents 76 per cent of the price of a bottle of whisky. The figure includes VAT. There are products where a strong case can be made for exemption from VAT. I would like to hear any justification that distilled spirits should be one. Excise duty on a 70cl bottle of 40 per cent spirits is £7.75. Of the brands championed by MPs last week, the lowest cost appears to be an Islay malt at £33.50. Excise duty makes up 23 per cent of the cost. Trade briefings need to taken with a pinch of salt.
Alcohol duties are important and their effects need to be considered in the round.
Dr Rice is chairman of Scottish Health Action on Alcohol Problems and honorary consultant psychiatrist at NHS Tayside.
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