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In an effort to understand the economic implications associated with various possible measures to tackle alcohol harms, the Home Office commissioned RAND Europe to undertake research into three particular policies — minimum pricing, ban on below-cost sales, and taxation. This study presents evidence on the links between alcohol prices and consumption and the economic impacts of each policy option, the statistical data describing the market for alcohol and findings from interviews with key stakeholders.
Main findings for each policy option are as follows:
- Ban on below cost sales (cost defined as VAT + duty): The effect on consumption may be relatively small compared with broader restrictions on discounts and promotions, and also with the introduction of certain minimum prices or tax hikes. Nevertheless, even if the effect is small, where it increases the price of the cheapest drinks, the ban could potentially lead to some reduction in hazardous/harmful drinking.
- Increased taxation: When the taxes are passed on, taxes affect all drinkers, which is why taxation has been considered a 'blunt instrument' that does not target those drinkers who cause harms, instead affecting all consumers to some extent.
- Minimum price: Depending on the minimum price introduced, the effect of this policy is especially strong for low-cost alcohol. Thus, minimum pricing has important implications for young and hazardous/harmful drinkers and low-income groups, who are more likely to purchase cheaper drinks.
Table of Contents
Chapter One
Introduction
Chapter Two
What do we know about the link between alcohol price and consumption?
Chapter Three
Evidence on economic impacts of alcohol pricing policies
Chapter Four
Data on the UK market for alcohol
Chapter Five
Alcohol producer and retailer relations
Chapter Six
Implementation costs of policy options
Chapter Seven
Potential economic impacts of policy options
Chapter Eight
Conclusion and discussion
Appendix A
Extended theoretical analysis
Appendix B
Descriptive statistics of the alcohol market and consumption
Appendix C
Interview Protocol
Research conducted by
The research described in this report was sponsored by the Home Office and was conducted by RAND Europe.
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