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Supermarkets will still sell cheap beer

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Supermarkets will still sell cheap beer
Article date: 29 Mar 2012

Sir, Professor Rhodes and his colleagues argue that increased alcoholic drinks prices reduce consumption based on " wealth of international evidence".

However, the paradoxical effect of tax increases on drinks in Britain, historically consumed in relatively expensive pubs, unlike most international examples, has been to reduce the average price for drinks paid by consumers.

This is because an unbalanced system of taxes and regulations has made pubs less competitive than supermarkets, with the consequence that pubs have lost 50 per cent of their beer sales to supermarkets in the past 30 years.

The main tax disparity relates to VAT, since pubs pay at a rate of 20 per cent for food sales, whereas supermarkets pay virtually nothing, enabling them to "cross-subsidise" drinks sales. By providing tax incentives for consumers to purchase drinks in supermarkets, the Government’s alcohol strategy is fatally flawed.

Article appeared in The Times on Thursday 29 March 2012

 

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