Drinkers subsidise teetotallers with tax

The direct costs of alcohol use to the government in England – including NHS, police, criminal justice and welfare costs – amount to just under £4 billion each year, whilst revenues from alcohol taxes amount to over £10 billion.

Using the most recent health, crime and drinking data, a report by the Institute of Economic Affairs claims that contrary to popular belief, drinkers are not a burden on the taxpayer. The net cost of alcohol to the state is minus £6.5 billion. Even if the Government halved all forms of alcohol duty, it would still receive more money in tax than it spends dealing with alcohol-related problems.

Key findings:
•    Alcohol-related crime costs the Exchequer nearly £1 billion per year. Other alcohol-related crimes, including drink-driving, add a further £627 million, making a total cost to the police and criminal justice system of £1.6 billion.
•    Alcohol-related health problems cost £1.9 billion per annum. Half of this results from alcohol-related hospital admissions (£984 million) with a further £530 million spent on Accident and Emergency attendances.
•    Welfare payments given to those unable to work because of mental or physical ill health attributable to alcohol consumption incur a cost of £289 million.

The public debate around alcohol policy is often centred on a claim that alcohol use costs Britain £20 billion a year. This figure, often used by public health campaigners, is extremely misleading, conflating social and economic costs (most of which are paid by individuals and businesses) with the costs to government departments (the cost to the taxpayer).

Arbitrarily monetising intangible costs such as lost productivity – likely to be borne by the drinker and not by wider society or the taxpayer – have led to highly misrepresentative figures being commonly used by policymakers. Moreover, mainstream figures give the gross cost – failing to attempt to estimate the net cost of drinking, and ignoring tax revenue generated from the sale of alcohol.

In the first study to look at the total net cost of alcohol consumption to the Government in England, author Christopher Snowdon examines how much drinkers cost public services as a result of their drinking. Internal costs and benefits (those which only affect the individual), emotional costs and intangible costs are irrelevant. By contrast, costs and benefits usually excluded – such as welfare payments and taxes have been added.

Commenting on the report, its author Christopher Snowdon, said: "It is time to stop pretending that drinkers are a burden on taxpayers. Drinkers are taxpayers and they pay billions of pounds more than they cost the NHS, police service and welfare system combined. The economic evidence is very clear on this. Forty per cent of the EU's entire alcohol tax bill is paid by drinkers in Britain and, as this new research shows, teetotallers in England are being subsidised by drinkers to the tune of at least six and a half billion pounds a year."