Government decides shops can't be trusted.

[TheAnimus]

http://www.bbc.co.uk/news/uk-politics-12212240

Plans for a minimum price for alcohol in England and Wales are to be announced by ministers.

The problem is that this doesn't seem to understand the issue, quite a few of the people I know who go out every week without fail spending a considerable sum on drink are in personal debt, probably negative total worth.

If people are willing to buy the stuff on a credit card when they know they won't get it all paid off, then who in their right mind thinks that stopping a supermarket from having a promotion will in any way help?

But isn't some of the tax levied as a percentage, so at least the treasury will win.

[0iD]

Bluddy government, like they haven't got anything better to to... honestly...?

[nichomach]

No. The level is set so that alcohol cannot be sold for less than duty plus VAT - the same duty plus VAT would be payable even if it were. The bottom line is that it's not likely to do very much if anything either in terms of raising revenue or addressing problem drinking. It's pretty much revenue neutral, though and will affect less than 1% of drink sold. That said, I'm not wild about the idea myself.

[peterb]

The shops or the people who buy cheap booze and drink to excess?

[Lucio]

One thing this might do is help out the local off licenses, they can't compete on price with Tesco, but if there's a minimum value then they can compete on convience and location a lot more effectively.

[father smurf]

would it benefit pubs as well?

[aidanjt]

No. The level is set so that alcohol cannot be sold for less than duty plus VAT - the same duty plus VAT would be payable even if it were. The bottom line is that it's not likely to do very much if anything either in terms of raising revenue or addressing problem drinking. It's pretty much revenue neutral, though and will affect less than 1% of drink sold. That said, I'm not wild about the idea myself.

Naw, it will bump up VAT revenue. VAT is 20% of the sale value, no matter what (baring some exemption items). It doesn't just mean extra tax free profits for pubs. Yet another charming stealth tax.

[scaryjim]

Can't see it changing things for pubs, most will already charge well over the minimum amount, and the supermarkets will still be a lot cheaper, I'd've thought.

Let's face it, the proposal is going to make virtually no difference to the actual cost of alcohol in your local supermarket (I mean, where can you buy a litre bottle of vodka for less than a tenner?!), but it sets a precedent around minimum pricing. Once there's an acceptance in the industry that minimal pricing is in place, it opens up a lot more options for the government in the future.

And in response to TAs original point, the Government's quite right to decide that shops can't be trusted. I don't trust any institution whose primary reason for existing is to line their own pockets

EDIT for cross post:

This reeks of yet another stealth tax to me.

Not very stealthy though, is it, since they've very specifically set the minimum level at the amount of tax they (should) receive? Or very taxy, since it'll only generate pence per sale at the most, and only on those very few occasions where alcohol was being sold at below duty + VAT. It's a compromise between setting a minimum price on alcohol and keeping the very profitable and taxable alcohol industry happy.

[aidanjt]

Not very stealthy though, is it, since they've very specifically set the minimum level at the amount of tax they (should) receive?

It's a stealth tax because they haven't introduced, or increased an existing tax, but they've added hundreds of millions in revenue by infringing upon free trade.

it'll only generate pence per sale at the most

Over billions of purchases. Every penny counts, even to me. You can't just say 'well it's only a few pennies so it's alright', or they'll have us penny pinched to death.

[mycarsavw]

BBC 3 - Read Steady Drink

Worth a watch, particularly for the piece on per-unit pricing. It's not groundbreaking journalism but watch it with an open mind.

[scaryjim]

I think you may be overestimating the actual impact of this ruling.

For instance, it will now be illegal to sell a pint of 5% beer for less than 60p. I've not seen many supermarkets selling beer for less than that anyway, and even if they did only 1/6 of the difference is additional tax for the government, so that's a maximum of 10p per sale (assuming the beer was being given away). The difference is somewhat less for the lower strength beers that are usually sold cheap.

It'll be illegal to sell a standard bottle of wine for less than £2. Again, I've seen very few supermarkets, even on their extra special offers, selling wine for less than £2 a bottle, and again, even if they do sell it for less only 1/6 of that is additional tax paid by the consumer.

Now, if you're actually buying sufficient alcohol at those kind of prices for this to affect you at all, you already have a bigger problem than paying an extra few p in VAT, frankly.

[nichomach]

aidanjt, you're wrong. Look, say the duty plus VAT on that duty on a can of beer is 38p. The supermarket sells that can as a loss leader for 29p. The government's take is still 38p because the duty and the VAT on it don't change; the supermarket is effectively swallowing the loss at the moment to get people in store. All that'll happen is that they won't be able to sell that alcohol at less than duty plus VAT on that duty. There is no effect on drink prices that exceed that level - so it ONLY affects those loss leaders - and even on prices that ARE affected, the government's take doesn't change.

[aidanjt]

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

[scaryjim]

... say the duty plus VAT on that duty on a can of beer is 38p. The supermarket sells that can as a loss leader for 29p. The government's take is still 38p because the duty and the VAT on it don't change ...

Not strictly true. The duty wouldn't change and would be picked up by the supermarket. The VAT proprtion of the sale price *would* change (the accurate difference is 6.3333p to 4.8333p), because the sale value has reduced (VAT is levied based on sale price, not on the duty). The government get 1.5p extra VAT from that sale at 38p rather than 29p.

So aidanjt is right to the extent that forcing a minimum sale price will bring in a small increase in VAT in those instances where alcohol was otherwise (essentially) being given away. But the additional VAT income from these low-value loss-leading sales is going to be utterly insignificant when compared to the duty + VAT income from all other alcohol sales added together.

[aidanjt]

I think you may be overestimating the actual impact of this ruling.

For instance, it will now be illegal to sell a pint of 5% beer for less than 60p. I've not seen many supermarkets selling beer for less than that anyway, and even if they did only 1/6 of the difference is additional tax for the government, so that's a maximum of 10p per sale (assuming the beer was being given away). The difference is somewhat less for the lower strength beers that are usually sold cheap.

It'll be illegal to sell a standard bottle of wine for less than £2. Again, I've seen very few supermarkets, even on their extra special offers, selling wine for less than £2 a bottle, and again, even if they do sell it for less only 1/6 of that is additional tax paid by the consumer.

Now, if you're actually buying sufficient alcohol at those kind of prices for this to affect you at all, you already have a bigger problem than paying an extra few p in VAT, frankly.

I think you underestimate how much alcohol is purchased. The government didn't implement this for the public good, or with any kind of expectation that it would solve alcohol related health problems. They tapped extra revenue by dictating private trade. Hundreds of millions is pocket change for them, but it does claw back a sum they can get motivated about, none the less.

[scaryjim]

I think you underestimate how much alcohol is purchased.

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...