Comment & Analysis
Dec 30, 2016

Minimum Alcohol Pricing is the Wrong Answer to an Over-Exaggerated Drinking Problem

Sean Barrett argues that excise duties on alcohol is a better proposal than a minimum alcohol pricing proposal that will only benefit retailers.

Sean BarrettColumnist

The Alcohol (Public Health) Bill is an illogical attempt to deal with an alcohol problem largely based on outdated statistics. The bill is based on the premise that alcohol consumption in Ireland is too high because the price is too low. Concerns about alcohol consumption in Ireland are not new. In the second city on the island, Belfast, a theme of preachers is to denounce the devil’s buttermilk. In the second city of the Republic, Cork, the statue of the apostle of temperance has pride of place in the main street.

The current alcohol bill seeks to address this “traditional Irish” problem by stipulating a minimum price for alcohol. The proposals in the bill were modelled by the Oireachtas Library and Research Service in December 2015. The price increases in off-licences due to implementing the bill would be: beer plus 44.2 per cent, cider plus 24.9 per cent, wine plus 19.1 per cent and spirits plus 18.6 per cent. The average for all off-licence sales will be plus 11.1 per cent and for the on-trade in public houses will be 0.2 per cent.

The bill is based on the premise that alcohol consumption in Ireland is too high because the price is too low


In contrast, to the excise taxes traditionally levied on alcohol where the revenues accrue to the exchequer, the revenues from minimum pricing accrue to the retailer. The Oireachtas estimate is that the largesse is worth €78 million a year to alcohol retailers with €69 million gain to off-licences and €9 million gain for the “on-trade” in public houses. The exchequer loss due to reduced consumption would be €34.3 million per year.

The strange aspect of the present bill is that, while opposing alcohol consumption, it confers a large windfall gain on the retailers of alcohol. Compared to excise taxes, the bill reduces exchequer incomes thus reducing the ability of the exchequer to fund the health services in dealing, among other things, with the problems of excess consumption of alcohol. The economics of this aspect of the bill make no sense.

The bill is predicated on the belief that Ireland is awash with cheap alcohol to a degree not found in other countries. World Health Organisation (WHO) data indicates that alcohol consumption per head has fallen by 24 per cent since 2003-2005 and is now below the EU average. The even lower target set for alcohol consumption by the government in promoting the bill is currently met by only three of 27 member states of the EU.

Alcohol consumption per head has been falling. The Revenue Commissioners excise data have shown this over the years. Members of the Oireachtas have been advised by their own research service of this for over a year. The international alcohol consumption data are published on the WHO website.

A benefit of minority government is that deputies and senators now have the incentive to read the Oireachtas library and research service analysis of bills. Under majority rule with a ruthless whip system, a parliamentarian who reads too much about legislation could be soon out of a job. Legislation should be debated on its merits. Rather than a parliamentary enforcer, Mr Whippy should be an ice cream retailer.

It is somewhat puzzling that the promoters of the bill give no credit to the large reduction in alcohol consumption in Ireland since 2005. They paint a dark picture in which alcohol consumption is rising, Ireland is awash with cheap alcohol and the problem is acute with excess alcohol consumption by young people, low-income people and an increased number of women drinkers. The evidence is that public houses have been closing in large numbers in urban and rural Ireland. Food sales, especially at lunchtime, are an increasing share of pub revenues. Pub licences used to command a massive premium when identical buildings with and without a public house licence were sold.

Young people today are far more responsible in their consumption of alcohol than when Private Eyes’ Lunchtime O’Booze described the midday bibulous behaviour of many. Garda statistics show that driving and public order offences associated with excessive alcohol consumption have also fallen. Drink driving is now condemned in contrast to when a strong publican lobby in the Oireachtas gave Ireland the most lenient restrictions on driving with alcohol taken.

The belief that low-income people are responsible for Ireland’s wrongly presumed alcohol problem lead to assurances by supporters of the bill that the price of alcohol in hotel lounges and private clubs would not be affected. The harm caused by the same alcohol product should be tackled across all retail outlets. Alcohol retailers must be laughing all the way to the bank as they plan how to spend the extra €78 million a year which this bill, unwittingly I presume, awards them.

It is somewhat puzzling that the promoters of the bill give no credit to the large reduction in alcohol consumption in Ireland since 2005

The Department of Health has persisted with the bill for over a year, knowing that it will enrich the drinks trade by €78 million a year. From the national point of view, it would be better that the department does not yet realise that the bill enriches a sector to which the department says it is opposed rather than that it has succumbed to lobbyists – a poisonous influence in Irish public life. To avoid even more cynicism, there should be a full examination of lobbying in favour of the bill.

Taxing activities that impose external or social costs is long established in economics. Transferring the revenues back to the sector which generated the social costs makes no sense. Other EU countries say that the measure has nothing to do with temperance either. It is a measure to reduce competition in retailing and to reduce the share of drink prices going to the primary producers.

They say that Ireland does not have an exceptional alcohol consumption per head. The instrument to control that problem, should it arise in the future, is excise taxation with the revenues accruing to the state. The anger and dismay of the objecting countries is understandable. If they were to retaliate by imposing minimum pricing on our exports, Ireland would object too.

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