Who pays the tab?

“Alcohol tax is widely recognised as one of the most important instruments governments have to address harmful drinking. Yet increases in duty are often resisted because of concerns that they are regressive and will therefore exacerbate inequalities.

It is unclear from the existing evidence how well-founded such fears are in the UK. Poorer households drink less alcohol on average. Yet surveys suggest that lower income households spend a greater share of their incomes on alcohol. On the other hand, surveys also find that alcohol accounts for a smaller share of the expenditure of lower spending households. This raises the question of whether income or expenditure is a better indicator of a household’s economic circumstances. We find both have limitations, but expenditure appears to be somewhat more reliable because of consistent under-reporting of income in official surveys.
In this report, we build on previous studies by directly estimating how much alcohol tax different households pay (rather than using total spending on alcohol as a proxy). Recognising that no indicator of affluence is perfect, we compare alcohol tax burdens across a range of measures:
income, expenditure, occupational class, housing size and tenure and car ownership.”

Read more from The Institute of Alcohol Studies (UK, February 2020)

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