By Campbell Evans
Talk of minimum pricing has dominated the debate on tackling alcohol misuse in the British media for the last few days.
Westminster is currently devising its new alcohol strategy and price is one of factors the prime minister is said to be looking. The Scottish government, too, has described minimum unit pricing as the "missing piece of the jigsaw" in tackling the country's relationship with alcohol.
The Scotch Whisky Association (SWA) agree that alcohol misuse must be tackled, but minimum unit pricing is not the way to go about it.
There are a number of reasons why it is not the answer: it is illegal, it would be ineffective in addressing misuse and it would lead to copycat trade barriers in global markets to the detriment of the Scotch whisky industry and the UK balance of trade.
The European Court of Justice has consistently found minimum unit pricing to be an illegal barrier to trade. To override this objection, a government would need to justify a ‘public health’ exemption.
This means they would have to show the measure was necessary and proportionate and, crucially, that there were no other measures available which would be less trade restrictive. This has never been achieved and we believe it is unlikely that governments would be able to overturn more than 30 years of European case law.
If countries wish to raise the price of alcoholic drinks the European Court has said this can be done through other less restrictive trade measures, including tax and duty. Why press ahead with minimum unit pricing which will inevitably lead to a lengthy and expensive legal battle funded by the taxpayer when a floor price could be the answer?
The UK government has already committed to introducing a ban on the sale of alcohol below floor price – a combination of duty and VAT – in England and Wales. The SWA would like to see the UK and Scottish governments work together to introduce this floor price across the British Isles. It would be legal and the revenue would go to the Treasury.
The UK duty regime should be overhauled so that a single rate is applied to all alcoholic drinks according to alcohol content – known as duty equivalence - to ensure a level playing field with no distortion of competition between different drinks. Scotch whisky is taxed up to 250% the rate of duty on some other drinks.
Why would minimum unit pricing be ineffective? There is no compelling evidence that it would reduce alcohol-related harm. Research commissioned by the Scottish government shows there would be no fall in the number of hazardous and harmful drinkers. It is a regressive policy that hits responsible drinkers and, in particular, those on lower incomes.
Finally, the scotch whisky industry – which currently generates about £125 a second for the UK balance of trade and directly supports about 10,000 jobs in economically fragile rural and urban communities, would be severely damaged by minimum unit pricing. Claims that as a ‘premium product’ Scotch has nothing to fear are wrong as producers of lower-priced ‘own label’ whisky brands would be damaged in the domestic market.
Of even more widespread concern is the impact copycat measures would have on Scotch whisky exports - worth more than £3.4 billion annually. If a 'health justified' trade barrier here was permitted to override EU trade rules, overseas governments could use spuriously based health justified barriers to apply discriminatory measures against scotch whisky.
South Korea, for example, has already threatened a more onerous tax on sprits which have a higher alcoholic content than 30% volume. This would catch many imported spirits, including Scotch whisky, but would not impact its local spirit, Soju.
Countries may seek to introduce discriminatory moves justified on health grounds which would hit exports and, in turn, impact the entire UK economy. This would undermine decades of improving market access for scotch and could reduce exports by as much as £500m a year.
The SWA believes alcohol misuse must be tackled, but illegal and ineffective minimum pricing is not the answer.
Campbell Evans is director of government and consumer affairs at the Scotch Whisky Association, responsible for relationships with government departments and parliamentarians in support of alcohol and health matters, UK tax campaigns and other relevant issues.
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