[benkuykendall]

A "sin tax" is logical enough -- higher prices discourage the excess consumption of alcohol and the money raised hopefully goes to beneficial government programs. However, I don't see why a minimum price is set. Wouldn't it be better to do away with the minimum price and raise the tax?

Say the cheapest beer is manufactured for $1, the minimum cost of beer is $2, and the tax is $1. Then, when a consumer pays $3 for a beer, $1 goes to the government, $1 for manufacturing costs, and $1 is profit for the producer.

Instead, imagine no minimum cost but a tax of $2. The consumer pays $(3+c), $2 goes to the government, $1 for manufacturing costs, and $c profit. Competition would drive c low, and manufacturers would be rewarded for low manufacturing costs instead of profiting from the minimum price.

[jdietrich]

>However, I don't see why a minimum price is set. Wouldn't it be better to do away with the minimum price and raise the tax?

It's the most effective way of disincentivising heavy drinking without needlessly punishing moderate drinkers.

Scotland introduced minimum alcohol pricing last year, with a minimum price of 50 pence per unit. The policy was developed in collaboration with the University of Sheffield Alcohol Research Group. The price of most wines, branded spirits and premium beers was unaffected, but the effect on the cheapest and strongest drinks was dramatic - the price of a 3 litre bottle of white cider increased from £3.69 to £11.25. That has a substantial impact on the very heaviest drinkers, who suffer the greatest harms and cause the greatest societal costs.

https://www.sheffield.ac.uk/polopoly_fs/1.565373!/file/Scotl...

[simlevesque]

I think they do that so the government does not appear too "greedy".

[jhoechtl]

This. Any maybe a form of market protection