SNP: A below-cost ban could make alcohol cheaper

Published: 19 August, 2010

The Scottish National Party (SNP) has claimed that a ban on below-cost alcohol sales would make many supermarket deals even cheaper.

The SNP, which is arguing for a minimum price of 40p per unit to be set for alcohol sales, said banning below-cost sales ? defined as sales lower than the price of duty plus VAT ? would be ineffective.

The party compared how drinks prices would be affected by a 40p per unit price versus an alcohol floor price of duty plus VAT.

According to SNP calculations, the price of a 70cl bottle of Asda own brand vodka (37.5% abv), currently on sale for £8.97, could fall by up to £1.67 per bottle if the below-cost ban was introduced.

It said that the vodka would retail at £7.34 (duty + VAT of 17.5%), or £7.50 when VAT rises to 20%. However, if the 40p per unit minimum price was introduced, the price would increase to £10.50.

SNP MSP Michael Matheson said he was "astonished" that Scottish Conservative and Labour party plans, which call for a ban on below-cost sales, would make alcohol cheaper.

He said: "It is widely acknowledged that there is a connection between price and consumption and that addressing price is a key part of tackling our alcohol culture.

"It is increasingly clear that the introduction of a minimum price is the only way to do that."

A spokesman for the Wine & Spirit Trade Association, which backs calls for a ban on below-cost sales, rejected the idea that alcohol would become cheaper if the policy were adopted.

He said the advantage of providing an "absolute floor price" is that it "ensures the price cannot drop below this level".

The Scotch Whisky Association (SWA) pointed out that setting a minimum price would violate European law.

A spokesman added: "In contrast, looking at proposed bans on sales below tax or cost, the European Court of Justice has indicated that such a mechanism is legal and less trade restrictive (than the Scottish model).

Printer friendly version