In an effort to curb alcohol-related deaths and hospitalizations, Scotland is preparing to increase their minimum alcohol prices. The new rule would raise the minimum price per alcohol unit by 30 percent, from 50 pence ($0.63) per unit to 65 pence ($0.82) per unit. (A typical beer contains two alcohol units, while a 25 ml pour of spirits contains one alcohol unit.) The minimum pricing rule went into effect in 2012, and health advocates report that the minimum pricing rule reduced alcohol sales by three percent, and is associated with a 13.4 percent reduction in alcohol-related deaths.
In addition to raising the minimum price, other ministers are calling for a tax to be levied on retailers who benefit from charging higher prices. It has been estimated that retailers earn an extra £30 million ($38 million) per year because of the minimum pricing. The proposed tax would redirect part of that money toward funding the health system.
Discussion Questions:
- Describe how consumers and producers are affected by a price floor. What happens if the retail price is already set above the minimum price?
- What are some of the negative effects associated with setting a price floor?
Sources| Scottish Government: https://www.gov.scot/publications/alcohol-minimum-unit-pricing-mup-continuation-future-pricing-consultation/pages/2/; Drinkaware: https://www.drinkaware.co.uk/facts/information-about-alcohol/alcoholic-drinks-and-units/what-is-an-alcohol-unit; The Guardian: https://www.theguardian.com/society/2024/feb/05/scotland-expected-to-raise-minimum-alcohol-price-by-30; Unsplash: Photo by chris robert on Unsplash