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Higher alcohol taxes could benefit poor

Alcohol taxes account for a similar share of the incomes and budgets of rich and poor households alike, and at worst are only “mildly regressive”, according to research by the Institute of Alcohol Studies.

“There is little reason for the government to avoid increasing alcohol taxes out of concern for the poor,” the researchers concluded.

Using government figures, the researchers calculated the amount of alcohol duty that different households paid as a share of their income and total spending. They then compared these figures between better and worse-off families, using a range of different indicators of how “well-off” they were: income, spending, social class, house size, home and car ownership.

In almost every case, they found little difference in the proportion of income or expenditure spent on alcohol duty by more and less affluent households. In fact, higher alcohol taxes could benefit disadvantaged groups, they said, given that they would likely see greater health benefits from lower drinking and receive a greater share of any increase in public spending.

IAS looked at the effects of using an increase in alcohol tax to increase funding for the NHS. They found that the poorest 60% of households would be better-off on average, getting more in spending than they pay in tax, while the richest households would pay more than they receive.

Professor Sir Ian Gilmore, chair of the Alcohol Health Alliance UK, said: “This research debunks the myth that alcohol duty increases disproportionately burden the poor. In fact, it shows that the most vulnerable have the most to gain if the revenue generated is invested in our overstretched NHS and alcohol services.”

The findings come as the government weighs up whether to increase alcohol duty in the upcoming Budget.

In last year’s Conservative Party leadership campaign, Prime Minister Boris Johnson called for a review of the effects of so-called ‘sin taxes’, and in particular their impact on less affluent households.