No, The EU Didn’t Just Ban Alcohol Minimum Pricing

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Just a small sample

But even if they did, we can still do something.

The European Court of Justice has released its judgment of the Scottish Government’s proposals to introduce a minimum unit price on alcohol.

Their judgment, published here, states that the proposals as written would be illegal on the grounds of being discriminatory towards cheap alcohol imports and thus would be a restriction on the free movement of goods within the EU.

They have, however, upheld the Scottish Governments arguments that MUP would lead to substantial health and social benefits and have agreed that it would, indeed, meet the goals of both reducing hazardous alcohol consumption and alcohol consumption in general (in an earlier article I noted that Scottish consumption of alcohol can be seen as substantially higher than the UK average simply by examining the tax records).

The court has therefore not banned MUP completely but has ruled that it cannot be implemented until and unless the national courts (i.e. Edinburgh and then the inevitable appeal to the Supreme Court in London) rule that the same alcohol reductions cannot be achieved via taxation. This sets out a test to be met by the Scottish Government.

But if that test is failed and taxation ruled appropriate, what form could it take?

The obvious first step would be alcohol duty but this is currently a reserved power and its devolution was ruled out of the Smith Agreement and the subsequent Scotland Act 2015 Bill. I would think it unlikely, given the current track record, that an amendment to devolve alcohol duty would succeed at this point so I think I’m safe in assuming that it will remain in Westminster hands. Nor, do I suspect, will George Osborne be keen to adjust his own plans for the UK simply to allow the Nationalists even a moment of victory so I can’t see him being amenable to changing alcohol duty at UK level either.

There is another way though, as pointed out by Andy Wightman on Twitter today, the Scottish Government currently DOES have the power to create new LOCAL taxes. If the courts ultimately agree with the ECJ that taxation would be just an effective method of reducing alcohol consumption as MUP then this would be a method within the competence of the Scottish Government to implement without further devolution or delay.

Such a tax need not be set locally, national legislation could fix the rate, though the advantages to doing so are quite strong. By keeping money within areas particularly blighted by alcoholism and alcohol abuse and by allowing the rates to be set to particularly target these areas the greatest good could be done the fastest. Conversely, those areas which perhaps see a lot of through traffic, people traveling into town for a responsible night out say, but suffer little actual harm from chronic abuse may wish to set rates somewhat lower so as to avoid driving away too much business.

While we’re looking at locally devolved alcohol sales taxes we could also take the advantage of the discussion to bring back proposals for alcohol production taxes too. Scotland is perhaps best known for its whisky exports but what is lesser known is the fact that many of the most famous distilleries actually employ comparatively few people and yet produce vast sums of money for their generally multinational corporate owners without doing all that much for a local area which often gives their very name to that drink. Given that these distilleries, and many brewers and other manufacturers, cannot easily move elsewhere (and certainly cannot move out of Scotland) then a local production tax seems particularly apt. Again, by setting it locally and by allowing local people a say in how it is set then they are in a position of power again and can directly benefit from our renowned exports.

Personally, I welcome the prospect of minimum unit pricing and do believe that it would be an effective aid to our national alcohol problem but my challenge to the government is that if the courts rule otherwise, there is still something we can do. Indeed, even if they don’t….why not both?

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10 thoughts on “No, The EU Didn’t Just Ban Alcohol Minimum Pricing

  1. Funny , I was thinking something along the same lines as a local levy to HGVs . Even if only to encourage some to use differrent transport systems especially after hearing the howling coming from the ‘ poor’ haulage company owners following the closure of FRB .
    Now would be a good opportunity to review if we really need potatoes transported 500 miles when we em actually grow them here.

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    • The economics of transport is about to go through a far more fundamental paradigm shift that I’m not sure many have yet grasped. Robot driven electrically powered trucks which only need to stop to load, unload and recharge (or switch out batteries) will drastically change the way we move goods.

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  2. Nice piece. The media coverage of this story was awful. So thanks for setting out the whys and wherefores.

    My near local distillery, Springbank in Campbeltown is incredibly generous to the town and the people. Running events at Christmas and paying the living wage are two of their benefits.

    Therefore, an extra tax would not be beneficial in this case. Plus they backed a YES in Indyref 😀

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  3. If the alcohol tax is set locally how is it collected? Was collection and the cost thereof not one of the problems with levying local income tax in place of Council Tax?

    Who would pay this local alcohol tax? Not everyone drinks. Is it envisaged as some sort of local sales tax? Buy alcohol pay the local sales tax. Again how do you collect it.

    This idea of a local tax seems to have come late to the party and poorly thought out by those advocating it. Perhaps the Scottish Government looked at it as a possibility all those years ago when first looking at ways to reduce alcohol consumption and discarded it because of the difficulties of applying it and collecting it.

    MUP has the advantage of being simple to apply and difficult to sidestep.

    Th

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    • We have, in Scotland, three tiers of tax collection agencies which could, conceivably, be used. Local councils (which already collect Council Tax and Non-Domestic Rates), Revenue Scotland (SRIT and, soon, Income Tax in general) and HMRC (VAT). Of those, only the last would require oversight from Westminster. Which of the former two is used could depend on whether or not the alcohol tax rate (which could be a sales tax, production tax or both) is set locally or nationally although it’s worth noting that NDR is set nationally but collected locally (Council tax is technically set locally but the current Scottish Government policy of the tax freeze has, for now, superseded that power). Ultimately, either option is likely viable.

      The principle objection to a local income tax rate was indeed collection costs but it’s worth noting that that proposal was for a nationally set and collected rate to replace a locally set and collected one at a time before a Scottish national tax agency existed. Now that Revenue Scotland exists, those setup costs may have been largely mitigated.

      I do happen to agree with you in that I’d prefer MUP, especially as far as the health and social benefits go. Remember that if an alcohol tax has to be used then the principle for it must always be towards those health and social benefits rather than revenue collection. This may change the equation when it comes to examining things like collection costs.

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