Budget 2012 did the cause of alcohol harm reduction no favours. Minister for Finance Michael Noonan rejected the restoration of excise duty to 2009 levels – a move which has lost the Exchequer a potential €178 million: the same amount that would have headed off the now widely condemned cuts to disabled young people, cuts to lone parents and increase in student fees.
Minister of State for Health Roisin Shortall has stated unequivocally that she is committed to tackling the price of alcohol in the new year, a point which Minister Noonan underlined in his budget speech. Nonetheless, it is hard to escape the idea that this was a lost opportunity for the Government to raise much needed funds that could have benefited some of the hardest hit including frontline services and health promotion. The 2 per cent vat increase is reckoned to have the capacity to raise only half the money an excise duty restoration could have done.
Ireland is currently paying an estimated €3.7 billion* a year in alcohol-related harm, ironically almost the equivalent amount we have to pay back to international debtors. Alcohol-related harm costs the Health Service an estimated €1.2 billion a year. Alcohol-related public order and crime costs the state a further estimated €1.2 billion* while the cost to each individual income tax payer is reckoned to be around €3,318. A 30% reduction in alcohol-related harm would result in a cost saving to the Exchequer of €1 billion in addition to the increased revenue from excise duty.
Alcohol prices have been consistently dropping since the middle of the year while other the price of other goods are going up. At the very most, a vat increase on alcohol will just slow down the drop but the gap between it and other products would still be the same. Meanwhile, one of the first of the big multiple retailers has said it will not be passing on the vat increase to its customers but will instead absorb the costs so any potential deterrent that a vat increase might have had – although the increase is too little to have an impact – will effectively be wiped out.
What this further underlines is the need for a minimum ‘floor’ price for alcohol to be introduced so that the big multiple retailers cannot simply absorb increases on alcohol prices.
From a public policy perspective the rejection of an excise duty increase makes little sense. Consumption figures are inextricably linked with pricing and when there are high levels of consumption, there are associated high levels of alcohol-related harm. Irish Governments have always been divided in their approach to alcohol: the stated aim has been to reduce consumption and associated harms but have in effect done the opposite making alcohol more accessible, available and affordable than ever before. This Government has the opportunity to take a different road. It is to be hoped that Budget 2012 was a false step and that the Government adopts a more strategic path to alcohol harm reduction. The National Substance Misuse Strategy is due out in the new year and that should tell us much.
For a copy of Alcohol Action Ireland’s pre-budget submission go Alcohol in Ireland – Finding the Right Measure at www.alcoholireland.ie