Alcohol costing NHS £1.6 billion a year as government
rakes in £4.7 billion from increased consumption
Tuesday 13 November 2007
Leading business and financial adviser Grant
Thornton says that under Labour, taxes on alcohol have dropped
markedly in real terms while consumption of wine and spirits has
increased by nearly 50%*.
The figures come as the Health Alcohol Alliance calls for taxes
on alcohol to be raised by 10% and advertising to be cut in an
effort to curb underage drinking and alcohol-related hospital
admissions which are costing the NHS over £1.6 billion a
year**.
Maurice Fitzpatrick, a tax expert at Grant Thornton, says "Since
Labour came to power, the rate of duty on spirits has remained
unchanged, but decreased in real terms by 30%, while the duty
collected has increased from £1.5bn in 1997/98 to £2.3bn in
2006/07. On wine, the rate of duty has increased by approximately
20% since 1997, only two thirds the rate of inflation, while duty
collected has nearly doubled in ten years from £1.4bn to £2.4bn in
2006/07. This suggests that over the past ten years underlying
consumption of alcohol has increased by nearly 50% while taxes on
alcohol have remained largely unchanged."
"The government clearly looks to taxation on alcohol as a
revenue raiser rather than as a tool to influence behaviour. Its
willingness to consider 'pay as you drive' and 'pay as your throw'
schemes to tackle congestion and climate change respectively has
not been echoed in the fight against the nation's booze
culture."
However, Fitzpatrick suggests that raising taxes on alcohol must
be part of a wider strategy in order to be effective.
"If the government is intent on reducing the consumption of
alcohol in the UK, it must use the tax system in conjunction with
other measures in education and advertising to fight the problem.
Tax alone will not provide the solution."
*Increase in revenue from VAT on spirits since 96/97 equals
£800m from £1.5bn in 96/97 to £2.3bn in 06/07. Percentage increase
equal to 53%.
Increase in revenue from VAT on wine since 96/97 equals £1bn
from £1.4bn in 96/97 to £2.4bn in 06/07. A percentage increase of
71%. However, when taking into account duty increases on wine over
this time (an increase of 20%), total percentage increase equal to
42%.
A blended average of percentage increase in revenue from duty
paid on spirits and wine equals 48% (nearly 50%).
**Institute of Alcohol Studies, July 2007