Scotland Urged to Tax Booze to End Benders

(CN) - Scotland's plan to curb problem drinking by pricing liquor based on its alcohol content violates the EU's commerce rules if less restrictive measures can be passed, the European Court of Justice ruled Wednesday.

In 2012, the Scottish parliament proposed legislation setting a minimum retail price for all alcoholic beverages in hopes of curbing alcoholism and binge drinking among Scots. Lawmakers codified the law a year later by setting the minimum price at about 76 cents per unit of pure alcohol the beverage contains.

The Scotch Whisky Association and others in the industry challenged the legislation as incompatible with EU law, since it could harm trade between Scottish producers and other member states and distort competition in the industry.

Additionally, the producers argued that EU law already requires that wine be priced by market forces - forces that would be undermined by Scotland's pricing regime. The producers said Scottish lawmakers could achieve their goal of fighting alcoholism by taxing liquor instead of regulating its minimum selling price.

The Scottish Court of Session referred the case to the European Court of Justice for its opinion on whether Scotland's minimum pricing scheme works under EU law.

Following its adviser's opinion from earlier this year, the EU high court on Wednesday found that the scheme would significantly restrict the market - something that might be avoided by adopting a tax measure raising the price of alcohol products rather than a minimum price per unit of alcohol.

While the Luxembourg-based court noted that Scotland's public health objectives were sound, the minimum pricing scheme could close the U.K. market to alcoholic beverages produced in other member states - a violation of the EU's principle of the free movement of goods.

And although the pricing scheme would raise the price of cheap alcohol - potentially curbing binge drinking and chronic alcoholism - other less trade-restrictive methods might do the job too, the court ruled.

Furthermore, the justices said an alcohol tax rather than the minimum pricing scheme would allow retailers the freedom to set their own prices.

Ultimately, the Scottish court that referred the case to the Court of Justice must decide whether an alcohol tax would protect public health and curb problem drinking better than the minimum pricing scheme, the EU high court ruled.

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