British drinks tax ‘needs reform’

The UK’s alcohol tax regime is in need of significant reform, a leading think-tank has said.

“There is a clear case for reform”, the IFS says (Photo: Flickr/Phillip Ingham)

The Institute for Fiscal studies says that the current structure of alcohol duties is “not well targeted at harmful alcohol consumption” and should be overhauled.

In its “Green Budget” outlining what it hopes to see announced by the Chancellor George Osborne in the government Budget next month, the IFS said: “As heavy drinkers tend to consume stronger alcoholic drinks, reversing the long-run trend towards lower spirits duties would target the system better at them.

“Action to tackle the very low levels of duty charged on strong cider would also make sense,” it continued.

“A litre of 7.5% abv beer is liable for duty of 138p, while a litre of 7.5% abv cider attracts duty of only 39p”.

Taking on the argument for minimum unit pricing, the independent think-tank said: “Changes of this nature should take precedence over imposing minimum prices, which has legal obstacles and which would likely result in windfall profits for drinks companies.”

“There is a clear case for reform” of alcohol taxes, it said.