Alcohol tax revenue ‘outweighs cost of abuse’

The cost of dealing with the results of alcohol abuse in England is significantly smaller than the tax revenue brought in from alcohol duty, a new study has found.

The amount brought in from alcohol taxes is £6.5bn more than is spent on the effects of drinking, the report says (Photo: Flickr/Phillip Ingham)

The direct costs of drinking alcohol to the government in England – including NHS, police, criminal justice and welfare costs – amount to just under £4 billion each year.

However, revenues from alcohol taxes amount to over £10 billion, according to research carried out by the Institute of Economic Affairs (IEA).

The centre-right think tank used recent health, crime and drinking data to compile the report, titled Alcohol and the Public Purse.

It claims to demonstrate, “contrary to popular belief”, that drinkers are not a burden on the taxpayer.

Rather, drinkers pay almost twice as much money to the government coffers as is paid out to deal with the negative effects of alcohol, it says.

Even if the government halved all forms of alcohol duty, it would still receive more money in tax than it spends dealing with alcohol-related problems, the report argues.

However, health charity Alcohol Concern told the drinks business that the cost to the taxpayer of alcohol abuse is actually £21 billion, which it says is “unaffordable in today’s economic climate”.

An ‘overestimate’

The IEA report found that alcohol-related crime costs the taxpayer nearly £1 billion per year. Other alcohol-related crimes, including drink-driving, add a further £627 million, adding up to a total cost to the police and criminal justice system of £1.6 billion.

Alcohol-related health problems cost £1.9 billion a year, it says. Half of this results from alcohol-related hospital admissions (£984 million) with a further £530 million spent on Accident and Emergency attendances.

IEA says that welfare payments given to those unable to work because of mental or physical ill health attributable to alcohol consumption incur a cost of £289 million.

But all of these costs are dwarfed by the £10.4 billion collected by the Treasury from alcohol taxes, the report says.

Health campaigners ‘misleading’

The £21 billion figure that the government and health campaigners attribute to the cost of alcohol on the taxpayer is “extremely misleading”, according to the report’s author, Christopher Snowden.

He said it combines the social and economic costs – “most of which are paid by individuals and businesses” – with the costs to government departments.

“It is time to stop pretending that drinkers are a burden on taxpayers. Drinkers are taxpayers and they pay billions of pounds more than they cost the NHS, police service and welfare system combined,” Snowden said.

“As much as 40% of the EU’s entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least £6.5 billion a year.”

‘Non-drinkers suffer’

In response to the IEA report, Emily Robinson, deputy chief executive of Alcohol Concern, disputed its £10 billion figure, which is significantly lower than the £21 billion cost estimated by the government.

She also said that it is non-drinkers that have to suffer the consequences of alcohol-related problems in society.

She told db: “The costs of alcohol related harm have been clearly identified by the government. The NHS faces a bill of £3.5bn every year and alcohol related crime costs £11bn. In total alcohol costs society £21bn.”

Non-drinkers suffer “every day” from the effects of alcohol on society, she said, “whether that’s from drink-driving accidents, being the victim of crime or anti-social behaviour, family breakdown, waiting in Accident and Emergency departments for their turn, even through to the costs of street cleaning town centres after a Friday night.”

“That’s why we need to get a grip on the harm caused by alcohol through effective policies such as minimum unit pricing,” she said.