I read with interest Kenny Macaskill's Agenda article on the anomalies of the "on-licence" and "off-licence" sectors of the drinks trade (“We need action to deal with the shift in alcohol consumption to off-sales”, The Herald, September 21).
As a licensee I have every sympathy with his observations, most of which underline the health and public safety issues evolving from the uncontrolled, unsupervised consumption of off-sales alcohol purchases, and the lack of a level playing field existing between these two competing sectors.
Another anomaly survives between these sectors, mainly unnoticed and supported unwittingly by the taxation system.
Heavily discounted trading at close, or even below, cost price means that a supermarket effectively pays no, or minimal VAT on these sales; HMRC presumes that retailers trade at a profit and the difference between tax on purchases and tax on sales will produce a healthy net VAT contribution to the economy: "on- sales" traders traditionally contributed significantly more tax on sales (more than double) than was reclaimed off the purchases made from their suppliers.
There is a much lower tax contribution to the Treasury when alcohol is sold at cost as a loss leader, pulling customers to a particular store, creating cash flow and attracting the paying public to the more profitable food items on sale. These carry no VAT element thus do not compensate for the revenue lost on the cut price alcohol sales.
The other loss to the economy is, of course, employment. Probably five (or more) times the personnel would be required to staff the number of pubs that might dispense the volume of alcohol made available in supermarkets. Consequently the lost jobs deny the economy a significant personal tax contribution, as many of those employees would be a second job paying full basic rate tax at 20 per cent.
As Mr Macaskill points out, it is an unfair playing field. Levelling it out might make a significant contribution to the economy, through employment, and a massive increase in personal tax and VAT contributions, as well as to the health and public safety of the nation through the measured and supervised drinking pubs are obliged to practise under stringent "on-trade" licensing laws.
Ed Wilson,
Three Bellies Brae,
Kirriemuir.
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