Boring but deadly: the real-world consequences of how we tax alcohol

Institute of Alcohol Studies | October 2019 | 10 minutes

Policy proposal: Launch a comprehensive review of alcohol duties in preparation for a post-Brexit taxation structure that better reflects alcohol strength across categories and addresses anomalies between categories.

The Alcohol Charter, produced jointly by the Drugs, Alcohol & Justice Cross-Party Parliamentary Group and the All-Party Parliamentary Group on Alcohol Harm, sets out effective and workable policies to reduce the damage to society caused by alcohol misuse. The proposal above is one of 16 evidence-based policy proposals laid out in the Charter.

The Institute of Alcohol Studies is one of more than 30 organisations that endorse the Alcohol Charter. Here, they outline their reasons for supporting this proposal.

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The structure of alcohol taxes hardly seems like an exciting topic. Corner a person at a social event and tell them you want to explain how alcohol duty works, and watch their eyes dart towards the door. It is the sort of dry regulation most of us want the experts and officials to deal with so we don’t have to think about it.

The problem is that the experts and the officials haven’t been able to take care of it. Between industry lobbying, EU regulations and an outdated system, Britain has ended up with an alcohol tax system that is irrational.

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UK duty per unit by product and strength, 2018

The chart above demonstrates some of the problems. Focus on the cider line, and notice two things. First, that cider is taxed at a much lower rate than the other products – between a half and a third as much as beer. Second, the duty per unit of cider falls as ABV rises, so that stronger drinks are taxed less. This is because cider is taxed on the basis of volume rather than alcohol content. A litre of 4% cider and a litre of 6% cider are taxed the same, even though the latter contains 50% more alcohol.

This makes for messy charts, but that is not the real problem. These decisions have dramatic real-world consequences. For years, 7.5% cider attracted the lowest duty per unit of any product, meaning producers could sell it cheaper than anything else. They responded to that incentive by producing ciders at exactly 7.5%. Three litre bottles of cider containing the alcohol content of 22 shots of vodka are sold for less than £4.

As the cheapest products, providing the greatest ‘bang for buck’, high-strength ciders became a drink of choice for heavy and underage drinkers. Dr. Peter Rice, chair of Scottish Health Action on Alcohol Problems, has described how through the 1990s “the impact became evident in the clinic”, as “patients who had previously gone for strong lagers, switched over to these new products, known in my area as Blue Subs”. A study before minimum unit pricing came into force in Scotland found that 25% of alcohol treatment patients in Glasgow and Edinburgh drank high-strength cider, and that almost half of these cider drinkers drank it exclusively.

Mike Nicholas, formerly of the homelessness charity Thames Reach, has described high-strength cider as “murder in a can”. According to Thames Reach, 98% of people in their hostels with alcohol problems were drinking high-strength beer and cider. Of the 16 deaths in Thames Reach hostels in 2016, 10 were attributable to high-strength alcohol.

Nicholas relays the story of JK, a hostel resident. Dependent on high-strength cider, he had succeeded in reducing his drinking from a peak of 12 cans a day. His girlfriend did not make it, succumbing to an illness related to her high-strength cider habit. JK told Nicholas, “I’ve suffered both physically and mentally because of these drinks. They’re too strong. It clouds everything I do. Stay away from them. I puke for hours on end every morning. These drinks should be wiped out, taken off the shelves. They’re worse than crack. I wish my girlfriend was still here.”

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An underpass frequented by Thames Reach clients – notice the distinctive blue bottles of high strength cider

This problem was created by Government policies. Can it be fixed by more sensible ones? Minimum unit pricing, which came into force in Scotland last year, made it illegal to sell alcohol for less than 50p per unit, tripling the price of high-strength cider. As a result, the market for high-strength cider in Scotland has been all but eradicated. This has not eliminated harmful drinking, but there are promising early signs that it has reduced it.

A more rational duty structure, which reduces the preferential treatment given to cider as well as the perverse incentive to produce stronger drinks, would also help. Though earlier this year the Government introduced a new rate of duty targeted at ciders between 6.9% and 7.5%, the change was too modest to have any real effect, as the chart below shows.

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UK duty per unit by product and strength, 2019

While the UK remains bound by EU directives, it must tax cider and wine according to their volume rather than their alcohol content. Brexit may therefore offer an opportunity to tidy up the structure of alcohol taxes. Even within the EU, though, the government can improve things. Ireland has narrower duty bands, steeper increases in duty as you move from lower to higher ABV cider and taxes cider at similar rates to beer. As a result, the cheap, strong ciders that plague the English, Welsh and Northern Irish markets do not exist in the Republic.

The structure of UK alcohol taxes is a fearsome combination of boring and deadly. With strokes of the bureaucrat’s pen an entire market has been created of products targeted squarely at exploiting harmful drinkers. It is in the Government’s power to undo this damage with a more sensible system. We need to keep the pressure up to make sure it does.

The Institute of Alcohol Studies is an independent institute bringing together evidence, policy and practice from home and abroad to promote an informed debate on alcohol’s impact on society, and advance the use of the best available evidence in public policy decisions on alcohol.

Join the Institute of Alcohol Studies on 16 October 2019 for their conference ‘Alcohol marketing: protecting the vulnerable’. See the programme here ( and sign up here ([email protected]).

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