What would happen if drink prices were raised sky high in the budget?

waxon-waxoff

There would have to be a national protest.... preferably on a Saturday night.

Drummerboy2

I'd expect wine to be targeted for an increase in excise duty.

FreudianSlippers

I'm getting, genuinely, so frustrated with this situation.

People are so thick (not talking about OP, but the general population).


Whoever is the one that thinks that raising price of drink and cigarettes is a good idea is smoking some serious crack and/or has no working knowledge of economics.
I'm always harping on in AH about how even a slight understanding of economics would make this country a better place, but no - people want to think from their heart rather than their brain.

Here is why it's dumb as shít to raise the prices of cigs and booze.


NOBODY WILL BLOODY BUY THEM

On the TV last night a big thing about illegal importation of cigarettes and the whole time I was thinking "lower the price of cigarettes"

They're complaining that we're losing tax revenue... LOWER THE PRICES.

Seriously, it does not seem to compute in their tiny brains that raising the price of things does not increase more revenue, in fact the polar opposite is true.

The same reason that raising the VAT rate is bollox. :mad: I'm seriously pissed off. They should lower VAT to 15% for a year and let people go spending crazy.

Think of it this way, if VAT this Christmas is 23% and €50mil is spent that means that the tax take is €11.5mil.
If VAT was lowered to 15% I would estimate that the people would spend twice as much buying gifts. I take into account now the fact that many people are going to the UK to purchase goods - if the prices were lower, then people would factor in cost of travelling to UK and the fact that goods here were now at an equivalent price to the UK and would decide it was not worth it. In reality, the figures would probably be more than twice as much IMO.
I digress... if VAT was 15% and €100mil was spent that is 15million in tax revenue.

It doesn't take a member of mensa to figure this out does it?



Same with cigarettes. Say they cost €9 in shop and €5 on the black market, surely if they went down to €7 not everyone would choose to purchase them legally, but I would imagine quite a significant amount would choose to acquire legal smokes, right?!
in 2007 it was estimated that 29% of people in Ireland smoked. 2009 survey says 4,450,446 in Ireland - that is about 1,201,620 smokers. Say 50% of them purchase cigarettes legally.

If all of those 50% buy 1 pack a week at €9 and tax is 61% (which I believe is the average tax in Ireland at the moment) that means currently the tax take is about €3,298,447 a week.(50% of 1,201,620 is 600,810; 600,810*9=5,407,290; 61% of 5,407,290=3,298,446.90)


If tax was lowered to 50% (which would make cigarettes approximately €7 in shops) and 20% more people (of the smokers) bought cigarettes legally, we have 841,134 people buying 1 pack of cigarettes legally per week @ €7.
€5,887,938 in sales per week 50% tax is €2,943,969 a week.
Now I realise this number is lower, but it doesn't accurately reflect the position. You have increased sales in shops and businesses, decrease in crime and money spent on fighting crime, etc.
It also doesn't factor in that most people buy a lot more than 1 pack per week, which raises the figure dramatically.

ejmaztec

Drummerboy2 wrote: »

I'd expect wine to be targeted for an increase in excise duty.

We wouldn't need a bailout if they decided to tax whine in this country

FoxT

Bathtub Gin
would come back in
and poitin stills a-plenty
with home shebeens
back on the scene
'twould be like 1920!

Kold

Booze? That's a rich man's drug.

I'll stick to my few lines of charlie to chill out in the evening.

mikemac

OisinT wrote: »

Think of it this way, if VAT this Christmas is 23% and €50mil is spent that means that the tax take is €11.5mil.
If VAT was lowered to 15% I would estimate that the people would spend twice as much buying gifts.

A big assumption

Charlie McCreevy lowered the vate rate before, just 1% I believe. And there was no increase in tax revenue, it was felt that retailers were pocketing the difference.
So they put it back up again

The same may happen again, consumer may see some savings but not big savings. The difference gets pocketed by the retailers

Yakult

I agree with OisinT.

The government brought it on themselves .Yet they blame the people who buy them and sell them...
Well Im sorry you idiots on control, but with all the unemployment and people having less money I think its time you got with the ****ing times and started given a **** about people. (Not just price of fags but the whole cost of living in this ****hole country)

If not, I hope the illegal ciggarettes boom and they start losing money big time. They dont deserve anything.

FoxT

The elasticity of demand argument (OisinT above) makes some sense but there are other factors to take into account.

Everybody knows we are in for 3-4 tough budgets. Because of this, Irish people are spending less , as they try to increase savings and/or reduce borrowings. I think that reducing taxes will not result in a significant increase in consumer spending, or in the ensuing tax take. if taxes are reduced then I expect people will save more, rather than spend more - and this attitude will be with us for at least the next 12 to 18 months.

Reducing tax on cigarettes will not result in a rise in consumption either - but it may increase the tax take if it results in a collapse of the smuggling trade.

ejmaztec

FoxT wrote: »

The elasticity of demand argument (OisinT above) makes some sense but there are other factors to take into account.

Everybody knows we are in for 3-4 tough budgets. Because of this, Irish people are spending less , as they try to increase savings and/or reduce borrowings. I think that reducing taxes will not result in a significant increase in consumer spending, or in the ensuing tax take. if taxes are reduced then I expect people will save more, rather than spend more - and this attitude will be with us for at least the next 12 to 18 months.

Reducing tax on cigarettes will not result in a rise in consumption either - but it may increase the tax take if it results in a collapse of the smuggling trade.

There's more chance of an end to prostitution.

bc dub

If they sky rocketed the price up, I'd just smoke more weed and take more e's.

the two things we can rest assured will not be affected by the budget.

PeterIanStaker

They should leave the price of drink as it is. Bad enough the feckin offies closing at 10 in this nanny state, if they put up the price of a pint they'd lose revenue in a big way.

Wingman2010

I doubt they will increase drink at all in the budget. Not that it will make a slight bit of difference to the ridiculous way drink is treated by some people in this country. There is a serious drink problem in this country and with so many politicians with vested interest in pubs they haven't the balls to do anything about it. People will always find the means to get drink, no matter what the price it is. If I do recall Michael McDowell tried to bring some reform into this industry but he was shot down; surprise susprise!

candy-gal1

If that does come in, and theres no drinks promos at all anymore, then an at home boozer FTW

Funkfield

PeterIanStaker wrote: »

They should leave the price of drink as it is. Bad enough the feckin offies closing at 10 in this nanny state, if they put up the price of a pint they'd lose revenue in a big way.

I've been thinking about this for quite a while. What if they lowered the price of drink in the budget. If they knocked a euro off the pint surely people would start going out more. It would encourage spending and would be something to take the edge off the current atmosphere of doom and gloom.

As OisinT was saying, surely some revenue is better than none at all.

Pace2008

I'd keep taking better drugs and drinking 1-2 pints per night.

JONJO THE MISER

*Opens bottle of ale*

bonerm

clived2 wrote: »

Shelves would be cleared of Listerine

Which is why Aboriginal's have the freshest breath in the world.

Quiet you

Problem solved............ http://www.ehow.com/how_4814370_make-simple-moonshine-still-home.html

rossie1977

OisinT wrote: »

Whoever is the one that thinks that raising price of drink and cigarettes is a good idea is smoking some serious crack and/or has no working knowledge of economics.

???

basic economics 101 teaches you that tobacco is an inelastic product but MAY become elastic depending on the financial situation of the consumer in the long run

s_carnage

amy21 wrote: »

I'd be having a lot less sex

Are ya really that ugly?!?

Hobbes

Funkfield wrote: »

I've been thinking about this for quite a while. What if they lowered the price of drink in the budget. If they knocked a euro off the pint surely people would start going out more

Do you think the Publicans would pass on that to the final price?

123balltv

go up north for drink pay back the Brits the 7 billion they gave us

FreudianSlippers

rossie1977 wrote: »

???

basic economics 101 teaches you that tobacco is an inelastic product but MAY become elastic depending on the financial situation of the consumer in the long run

That's not the issue here. The issue here is that raising the price of cigarettes in this country is turning people to buying illegal cigarettes.
If Economics 101 is what you mentioned, then Economics 102 is about availability of substitutes and the effect on elasticity.

OutlawPete

https://www.youtube.com/watch?v=Qz1QlOp6K0k

johnmcdnl

we'd all just cross the border duh :rolleyes::pac::pac:

rossie1977

OisinT wrote: »

That's not the issue here. The issue here is that raising the price of cigarettes in this country is turning people to buying illegal cigarettes.
If Economics 101 is what you mentioned, then Economics 102 is about availability of substitutes and the effect on elasticity.

illegal cigarettes would be flooding the market whether a box of 20 was €1 or €20, spain had a huge problem with illegal cigs despite having one of the lowest prices in the developed world http://www.who.int/tobacco/training/success_stories/en/best_practices_spain_smuggling_control.pdf

most people are not going to go out of their way to buy illegal cigarettes down some lane, if you double the price of a box of 20 in the morning, nearly everyone will grumble but most will pay it

FreudianSlippers

rossie1977 wrote: »

illegal cigarettes would be flooding the market whether a box of 20 was €1 or €20, spain had a huge problem with illegal cigs despite having one of the lowest prices in the developed world http://www.who.int/tobacco/training/success_stories/en/best_practices_spain_smuggling_control.pdf

most people are not going to go out of their way to buy illegal cigarettes down some lane, if you double the price of a box of 20 in the morning, nearly everyone will grumble but most will pay it

It's not down "some lane" though. Walk down Moore St. at least 10 people will come up to you and ask if you want to buy cigarettes.

I don't think it will solve the illegal cigarettes problem with price, but it will make illegal cigarettes less attractive to lower the price. I don't think that raising the price is going to do anything and I do not buy that people are going to grumble and pay.

chicken fingers

OisinT wrote: »

Think of it this way, if VAT this Christmas is 23% and €50mil is spent that means that the tax take is €11.5mil.
If VAT was lowered to 15% I would estimate that the people would spend twice as much buying gifts.


It doesn't take a member of mensa to figure this out does it?

If prices were lowered 8%, people would spend twice as much [in your opinion]
I´m sorry, but thats just... just no.

FreudianSlippers

chicken fingers wrote: »

If prices were lowered 8%, people would spend twice as much [in your opinion]
I´m sorry, but thats just... just no.

Why? Did you read my reasoning?

I'm assuming no. I'm also assuming that you have no relevant backing evidence to say otherwise.

In 2009, €435m was spent by people from the Republic in the North (CSO statistics).