Last fall I wrote in some detail about “minimum pricing” of alcohol, an innovative approach to reducing high-risk drinking. At the time, minimum pricing was attracting support from a number of public health and public safety experts in the U.K. To recapitulate the key points, very heavy drinkers shop around for cheap booze, and as a result pay substantially less for each unit of alcohol consumed than does the rest of the drinking population. In the U.K., this typically involves going to a supermarket and buying high alcohol content drinks at low prices – indeed sometimes the alcohol is sold below cost as a loss leader for the store. Whereas an excise tax falls to varying degrees on all drinkers, minimum pricing concentrates its effect entirely on the high-volume alcohol consumers who experience and cause the most damage. A further advantage of minimum pricing is political: Because it isn’t a tax, it draws less opposition from many retailers and members of the public.
From the perspective of economic efficiency, I think it makes the most sense to do this through taxes. It would be better for the economy and better for public health if the state collected more revenue from problem-drinking and less revenue from things we want to see more of, like sales and investment.