Extra drinks tax: The Lib-Dems just don’t get it

Enjoying a pint with Chris Heaton-Harris (now MP for Daventry)

According to recent news reports, the Lib-Dems are proposing a new “per-drink surcharge” in pubs, to provide additional revenue to help local councils deal with “the extra costs of binge drinking” — street cleaning, policing and so on.  I recently Tweeted, tongue in cheek, that extra taxes on drinking should do a lot to rebuild Nick Clegg’s popularity.

This is yet another example of the extraordinary naïveté of Lib-Dem thinking on tax (if indeed they think at all).  Their first solution to any problem is to apply a new tax.  And they have blind faith in the false proposition that extra taxes necessarily generate extra revenue.  In fact, extra taxes are more likely to prove yet another nail in the coffin of the pub business.

We already have amongst the highest beer taxes in Europe.  We have beer — our traditional British alcoholic beverage — taxed disproportionately to wine.

Pubs are also having to compete with cheap alcohol from supermarkets.  But that’s not their only problem.  The drink-driving laws have done huge damage to the pub trade, especially for rural pubs.  The traditional public house is under serious threat.  According to the British Beer & Pub Association, pubs are closing at a rate of thirty nine every week.

It’s not just the prices and the taxes and the drink-drive laws.  The smoking ban has decimated the customer base, and given the 25% of the population who smoke yet another incentive to buy their beer at the supermarket, and drink it at home.

We have s systematic policy of suppressing the pub trade.  We can save the great crested newt, but we’re failing to save one of the great cultural icons of British life.  That’s a scandal.

But as I noted above, it’s also symptom of the Lib-Dems’ economic illiteracy.  They need to study the Laffer Curve.  But if that’s too much of an intellectual challenge for our Coalition partners, they could just remember the straw that broke the camel’s back.  Higher tax rates frequently don’t raise revenues — especially when taxes are already too high.  And they destroy businesses and livelihoods and prosperity and growth.

That’s true whether it’s a new “per-drink surcharge” in pubs, or a mansion tax, or a 50% income tax rate.  Counter-intuitive it may be, but it’s also a fact: lower tax rates increase revenues, and jobs, and growth, and prosperity.  New taxes and higher taxes do the opposite.  Time for Nick Clegg to wake up.  And grow up.

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3 Responses to Extra drinks tax: The Lib-Dems just don’t get it

  1. Jonathan says:

    “The drink-driving laws have done huge damage to the pub trade…”

    Can you clarify your comment, do you think the current laws are too harsh?

    Just look at Belgium if you want to see a country that does not enforce tight drink-driving laws – very high road deaths and casulty numbers that make your eyes water!

  2. Those on lower incomes are already struggling to pay their bills, put food on the table, and keep a roof over their heads. The last thing they need is the cost of a welcome pint to go up. For many, it is one of the few pleasures they have left in life.

    Andrew Allison,
    Taxpayers’ Alliance

  3. Rozza says:

    Roger that’s only counter-intuitive if you’re not very bright. Do you think the tax on alcohol has a social, as well as an economic imperative in that it isn’t just to raise revenue, but also to try and encourage people to drink less?

    And I’d love you to answer Jonathan’s point. Are you saying that people should be allowed to drink and drive to save rural pubs? Or do you agree that small rural businesses should challenge themselves and diversify?

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