Alcohol duty does not disproportionately burden worse-off

New research from the Institute of Alcohol Studies has claimed that higher alcohol taxes could benefit disadvantaged groups.

The researchers calculated the amount of alcohol duty that different households paid as a share of their income and total spending. The analysis indicates that alcohol taxes account for a similar share of the incomes and budgets of rich and poor households alike, and at worst are only mildly regressive, with little difference found in the proportion of income or expenditure spent on alcohol duty by more and less affluent households.

However, the IAS says that higher alcohol taxes could benefit disadvantaged groups, who would likely see greater health benefits from lower drinking and receive a greater share of any increase in public spending.

The analysis looked at the effects of using an increase in alcohol tax to increase funding for the NHS. They found that the poorest 60 per cent of households would be better-off on average, getting more in spending than they pay in tax, while the richest households would pay more than they receive.

Aveek Bhattacharya, author of the report, said: “The single most effective way for the government to reduce harmful drinking is to make alcohol less cheap. Based on these findings, the Chancellor should not be put off increasing alcohol taxes in next month’s Budget out of concern for inequality. The cuts to alcohol duty he has inherited will cost the public purse £1.2 billion this year, money that would do much more to help the economically disadvantaged by being invested in public services. Gradually raising alcohol duty above inflation over the next 12 years could save 5,000 lives, with a disproportionate share coming from the most deprived households.”