Monday 25 January 2010

Minimum Pricing

Now that a major brewer has joined the campaign to bring Scottish alcohol consumption under control, let's dispose of the 'illegal under EU law' argument. The argument goes like this -

1. The European Court has ruled that minimum pricing for tobacco contravenes Article 9(1) of Council Directive 95/59/EC of 27 November 1995 on taxes other than turnover taxes which affect the consumption of manufactured tobacco so minimum pricing on alcohol is illegal.

2. Er, that's it.

Here's the problem with that argument - the case to which they refer (it's actually three cases but the Advocate General issued one Opinion to cover them all, delivered on the 22nd of October 2009) rests on the fact that tobacco producers and importers are permitted to set maximum prices for their products (it's about payable duty, they fix a maximum price and pay the duty on the maximum price in order to make sure they can't pay duty on a price lower than they sell it for - then there's another duty added on 'per unit' - the second one is the one you hear about in the budget) and that case law has indicated that this means that minimum prices for tobacco are illegal.

It's a wee bit tortuous but not too bad - minimum pricing on tobacco is not expressly forbidden but the opinion of the Court has been that imposing a minimum price limits inhibits the rights of the manufacturers to decide their own maximum prices (they couldn't decide on a maximum price lower than the minimum price), so the imposition of minimum pricing was illegal. The legal argument upon which the member states were contesting the action was contained in the reservation that the right to set maximum prices "may not, however, hinder implementation of national systems of legislation regarding the control of price levels or the observance of imposed prices, provided that they are compatible with Community legislation" and you should expect that to come back to the Court in due course.

What's important, however, is that the Opinion is based solely on the right of the tobacco companies to set a maximum price and that right being infringed by the imposition of a minimum price - alcohol producers do not have the right to impose maximum prices.

Tobacco taxation (including the right of manufacturers to set maximum prices) is governed by Council Directive 95/59/EC while the alcohol taxation regulations are contained in Council Directive 92/84/EEC.

Meanwhile, the EU's strategy to reduce alcohol-related harm includes using taxation as a means of introducing minimum pricing (an option not open to the Scottish Government because of the restrictions of the current devolution settlement; but indicates that the EU is in favour of using pricing policy as a means to manage alcohol consumption); altering the ages at which alcohol can be sold (remember that one?); and lowering the allowable blood alcohol limit for drivers, including a zero rate for young drivers, public transport drivers and freight drivers.

There's lots and lots of information available through the European Alcohol and Health Forum for anyone who wants some light reading with their sherry.

Mind how you drink!

1 comment:

scribblercraig said...

Calum, you may or may not be aware but the guys at Brewdog backed the SNP Government plans as well last year - but no one from the Government got back to them on it.