Government decides shops can't be trusted.

[nichomach]

Not strictly true. The duty wouldn't change and would be picked up by the supermarket...

No. Look, you may be paying 29p, but that is less than the duty plus VAT on duty cost of the can, OK? As it stands, however, the supermarket must pay the cost of duty and VAT on that duty, i.e. 38p. They are selling that can at a loss, since they are charging less than they are obliged to pay in duty and tax on that duty. The only change will be that supermarkets etc will not be able to sell that can for lower than the cost of the duty and the VAT chargeable on that duty (which is the only VAT applicable). The government's tax take on that 29p can does not change since it is already, for duty and tax purposes, a 38p can.

[scaryjim]

... As it stands, however, the supermarket must pay the cost of duty and VAT on that duty ...

Sorry nichomach, but AFAIK that's not how VAT works. VAT is paid by the supermarket based on the actual selling price. They have no direct involvement with paying alcohol duty. If you can provide me with a link that states otherwise I'll be happy to be corrected, though...

The duty (again, afaik) is actually paid by the brewers / distillers (and importers for drinks made outside the UK), although obviously they pass on that cost to the various distributors and wholesalers (and so on down the chain to the consumers).

[TheAnimus]

I don't trust any institution whose primary reason for existing is to line their own pockets

Whilst this is partly in jest, i'm going to start a new thread because I find it intresting the way people think such a concept is negative.

[nichomach]

Selling at a loss just means less VAT. The percentage of the VAT is applied to the value of the transaction, not the RRP.

No. RRP has nothing to do with it, and neither, oddly, does the price you pay at the till. Look, the supermarket is obliged to pay a certain amount in duty and also VAT on that duty on alcohol. They may elect to bear some of the cost of that by selling to you at a loss, BUT that doesn't change the fact that the government wants its (e.g.) 38p. Think of the beer and its containing can as having absolutely no intrinsic value in themselves, OK? The supermarket has already written the cost of those off. The only remaining costs are the duty and the VAT on it. The government charges x amount in duty and then 20% on top of that in VAT on that duty, in our example adding up to 38p. When the supermarket charges you 29p, they are effectively electing to bear the 9p difference between what the government takes and what you pay, but that doesn't change what the government receives at all. The only effect of this change is to remove the ability of the supermarket to bear that 9p difference.

[scaryjim]

Supermarkets do not pay VAT on duty, and I'm really not sure where you get the idea that they do? If that is the case, what would I pay VAT based on when I provide IT services to my clients? What do you base the VAT for graphics cards on?

VAT is the same tax regardless of what it is being charged on. Duty has nothing to do with it. When you buy something costing 60p that has VAT levied on it, 10p of the money you pay is VAT. If you buy something for £1.20 that has VAT levied on it, 20p of the money you pay is VAT. That's how VAT works. It's based on the actual cost of the service or product. It doesn't suddenly change because the product has alcohol in it.

I assume you accept that if I buy a bottle of wine for £10 I pay more VAT than if I buy a bottle of wine for £4?

[aidanjt]

What? That doesn't alter the fact that Price at the till = Value + VAT, and since VAT is a percentage, a demanded increase in Price means a linear increase in Value and VAT. You can't increase price without increasing VAT revenue without decreasing the VAT percentile. Duty is incorporated into the cost value and is completely beside the point.

[nichomach]

Fair enough, I'd forgotten that duty was levied at production rather than retail; my mistake (and a rather basic one!)

[aidanjt]

No, I don't think I do. I think you over-estimate how much alcohol is regularly purchased at a lower price than Duty + VAT. For instance, I purchase a fairly significant amount of alcohol each week. In fact, I almost certainly drink too much. I can't remember the last time I paid less than, or even anywhere close to, the minimum purchase costs that this exercise will bring in. As I said earlier, 60p for a pint of strongish beer, £2 for a standard bottle of wine, £8 for a standard bottle of 40% spirits (that one, I'll admit, is potentially at risk with generic vodka / gin / rum). This change will *only* affect drinks purchased below those prices.

The one that might get hit is strong (between 5.5% and 8.5%) sparkling cider - that'll now cost a minimum of £2.61 per litre. Yup, no more cheap White Lightning. Gods what a terrible thought...

Which sells by the tanker load, that wont change with 20p or whatever added to the price. Frankly, if this move has no health benefits (which it doesn't), nor adds any revenue (which you claim it doesn't), then what is the point in doing it beyond sheer incompetence? I suppose one could argue that it's the start of an incursion into private trade, but the government has been doing that for some time with alcohol and tobacco taxes and the like for a long time.

[nichomach]

Being seen to be doing something while actually not affecting anything? Very Jim Hacker .

[scaryjim]

Which sells by the tanker load, that wont change with 20p or whatever added to the price.

What about a doubling of the price?

Just nipped out to get some crisps from the local Spar, so (being somewhat obsessive by nature) I had a quick look at their current alcohol offerings. Of all the products available - including special offers - only two would be affected by this proposal, both of which were 2l bottles of strong white cider, both of which would go from ~ £3 to well over £5

So, if this change has any affect, it's going to be to move hardcore alcoholics off the white cider and onto something a little less gut rotting. Can't say I'm weeping into my Kronenburg over that one, tbh...

[aidanjt]

Which will just be £2 a day off their food bill. Not exactly going to promote better health.

[peterb]

Which will just be £2 a day off their food bill. Not exactly going to promote better health.

Better give it away then, so they'll have more to spend on their healthy food bill.

[aidanjt]

Better give it away then, so they'll have more to spend on their healthy food bill.

I didn't say give it away. Just don't meddle with market prices if it has no positive gain.