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Alcohol: Minimum unit pricing

20 October 2015

What will Minimum unit pricing really mean? What about the legalities surrounding it? We examine these questions and more.

The publication of the HRB's National Alcohol Diary report last year, reinforced the case to introduce minimum unit pricing (MUP) for alcohol in Ireland. The introduction of MUP is often met with opposing views such as '...nanny state gone mad...', or 'why should I have to pay because others can't drink responsibly?'

The recent response of the European Court of Justice’s Advocate General re-ignited the debate and was taken by some to suggest that minimum pricing was not going to be legally enforceable. However the judgement was a little bit more nuanced that that.

What the European Court of Justice’s Advocate General actually said was that MUP for alcohol is legal ‘on condition that it shows that the measure chosen presents additional advantages or fewer disadvantages by comparison with the alternative measure’, in this case, general taxation.

There is compelling international evidence that pricing is one of the most effective ways to reduce alcohol consumption and tackle alcohol-related harm. The World Health Organization (WHO) has made it clear that there is “indisputable evidence that the price of alcohol matters”. It is clear that if the price of alcohol goes up, alcohol consumption and its related harm goes down.  An increase in the price of alcohol through taxation is a general pricing intervention that will reduce alcohol consumption among all drinkers equally and decrease its related harms.

However, minimum unit pricing (MUP)  is a targeted measure, designed to reduce alcohol consumption among heavy drinkers and harmful drinkers (such as binge drinkers). Cheap alcohol products are favoured by the heaviest drinkers among us, who generally seek to get as much alcohol as they can for as little money as possible and are most at risk of alcohol-related illnesses and death. In addition, our young people, who generally have the least disposable income and have the highest prevalence of binge drinking, buy cheap alcohol. An MUP policy stops alcohol being sold at very low prices in the off-trade, particularly supermarkets, where alcohol is frequently used as a “loss leader” and sold below cost.

MUP is a “floor price” beneath which alcohol cannot legally be sold and is based on the amount of alcohol in a product, measured in grammes. One standard drink in Ireland contains 10 grammes of alcohol and an MUP would apply per standard drink. Under a MUP policy of one euro per standard drink,

  • a bottle of spirits could not be sold for less than 21 euro,
  • a bottle of wine could not be sold for less than seven euro, and
  • a pint of beer could not be sold for less than two euro.

The evidence for the benefits of MUP can already be seen in Canada. For example, in  British Columbia a 10% increase in the MUP was associated with a 32% fall in wholly alcohol-related deaths, while it also led to reductions in alcohol-related hospital admissions and crime, particularly alcohol-related traffic offences and crimes against the person.

In 2013 the Sheffield Alcohol Research Group (SARG) adapted the Sheffield pricing model for alcohol to Ireland in order to appraise the potential impact of different  pricing policies. MUP is compared to general taxation in this example.

  • For a one euro MUP policy, the estimated per-drinker-reduction in alcohol consumption for the overall population is 8.8% and equates to an average annual reduction of 57.2 standard drinks per drinker per year. As this is a targeted pricing policy, high-risk drinkers have larger estimated reductions in alcohol consumption as a result of an MUP policy than increasing-risk or low-risk drinkers. For example, the estimated reductions in consumption for a one euro MUP are 15.1% for high-risk drinkers, 7.2% for increasing-risk drinkers and 3.1% for low-risk drinkers.
  • The introduction of a 10% (tax) increase on the price of all types of alcohol (cheap and expensive) would decrease alcohol consumption for all drinkers by 5–6% and would affect low-risk, increasing-risk and high-risk drinkers equally.

The Scottish Court of Session has already considered this matter and is of the view that taxation is ‘likely to be less effective in achieving the legitimate aims which the minimum pricing measures pursue’. Ireland’s MUP model also demonstrates that MUP has additional advantages over a 10% general tax increase on alcohol.

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