A Wee Dram of Trouble
Here’s an idea that’s as likely to backfire as to succeed: ‘Scotland announces minimum price for alcohol.’
To help combat binge drinking, Scotland will be setting a minimum price for drinks, even store-brand beverages sold at a supermarket, based on their alcohol content. The idea is that by artificially raising the price of alcohol, it will curb consumption.
I’ve been to several places north of Scotland that have high taxes on alcohol, and if the high prices had any negative effect on binge drinking, it was not noticeable.
The problem as I’ve come to understand it is that because the price of alcohol is so high, when people drink, they binge drink to get their money’s worth. So, instead of reducing binge drinking, high prices might actually encourage it.
Higher prices also might push people toward high-alcohol liquors (like vodka and whisky) instead of beer or wine. They obviously also might encourage smuggling, drinking moonshine (which can be more dangerous than commercially made alcohol) and might push younger people toward substitutes, like marijuana or pills or huffing paint (which can also be more dangerous than commercially made alcohol).
So, while I’m certain the politicians pushing this price increase have the best of intentions, if they don’t consider the unintended consequences of their decisions, they might cause a nip of trouble more than what they cure.
UPDATE, September 21, 2010: I saw this quote on a placard in Thomas Jefferson’s wine cellar at Monticello, “no nation is drunken where wine is cheap; and none sober, where the dearness of wine substitutes ardent spirits as the common beverage…fix but the duty at the rate of other merchandise, and we can drink wine here as cheaply as we do grog, and who will not prefer it?”
In other words, when we tax wine until it is expensive to drink, people will substitute ‘ardent spirits’. Taxing alcohol heavily only hurts the moderate, middle-class consumer the most. The wealthy aren’t affected by the taxes, and poor but heavy consumers of alcohol care more about getting their hands on alcohol than they do about the price, so only those in the middle get pinched.