Alcohol taxation: EC approximation and its UK effects

The paper reviews the European Commission's (EC's) latest proposals for the approximation of indirect taxes on alcohol. In them, the Commission publicly and unequivocally accepts the connection between alcohol taxes and health. The paper compares the proposed target rates with existing alcohol taxes in the UK, and presents some simulated estimates of their effect on UK consumption. The estimates are preliminary, but are published now rather than risk delaying until the EC has taken irreversible decisions. They relate to 1988, the latest year for which simulations could be run, and suggest that, if the target rates had applied then in the UK, consumption per adult would have been more than two litres of pure alcohol higher than otherwise. The paper also reviews the objectives of a Single Internal Market in the EC and argues that indirect tax approximation is not necessary to achieve them. The current EC proposals are a serious threat to alcohol control policy in the UK, but are unnecessary to attaining the basic goals of a Single Internal Market and contain an open invitation for Member States to argue for national sovereignty, on health grounds, in choosing rates of alcohol excise duty. The paper suggests that this should be the UK argument in continuing discussions at the Community level.