Published:

Fiscal Policy and Tax

Estimating revenues from a proposed levy on non-domestic rates for alcohol retailers in Scotland

This morning we published a report looking at how much revenue might be raised from a non-domestic rates-based levy on alcohol retailers in Scotland. Examining approximately 2,700 premises with exclusively off-premises licences in Scotland, we find that a 13p per pound of rateable value  – the same rate as the Public Health Supplement in 2013/14 and 2014/15 – would be expected to raise around £57 million per year. We also estimate that changing the levy rate by 1p would change revenues by £4.4 million per year, resulting in revenues of £44 million per year for a 10p levy and £70 million per year at a 16p levy.

The analysis and writing-up of the results was undertaken independently by the FAI. The analysis and reporting on results have been conducted independently by the Fraser of Allander Institute, and the results hereby presented have not been influenced by Alcohol Focus Scotland. The report does not advocate for whether the levy should be introduced or not, merely looking at what revenues it might raise if it were to be introduced.

We have also analysed the sensitivity of the levy revenues to different thresholds. Using 13p per £1 of rateable value as an illustrative case, the amount of revenue raised would be approximately £57 million per year. This would decrease to £56m if applied to premises with a rateable value of over £20,000, £53.4m for a threshold of over £50,000, £50.2m for a threshold of
over £100,000, and £39.5m if the levy were to apply to premises of over £300,000 only.

In the base case (13p), the majority of revenues (88%) come from premises with a rateable value over £100,000. The majority of revenues from each threshold comes from supermarkets, which contribute 86% of total revenue in the case of no threshold, and 94% of revenue if a threshold of £300,000 and more is applied.

The full report is available here.

Authors

João is Deputy Director and Senior Knowledge Exchange Fellow at the Fraser of Allander Institute. Previously, he was a Senior Fiscal Analyst at the Office for Budget Responsibility, where he led on analysis of long-term sustainability of the UK's public finances and on the effect of economic developments and fiscal policy on the UK's medium-term outlook.

Allison is an Associate Economist at the Fraser of Allander Institute.