title: Alcohol tax pass-through across the product and price range: do retailers treat cheap alcohol differently?
abstract: OBJECTIVE
  Effective use of alcohol duty to reduce consumption and harm depends partly on retailers passing duty increases on to consumers via price increases, also known as 'pass-through'. The aim of this analysis is to provide evidence of UK excise duty and sales tax (VAT) pass-through rates for alcohol products at different price points.
  
  
  METHODS
  March 2008 to August 2011, United Kingdom.
  
  
  METHODS
  Panel data quantile regression estimating the effects of three duty changes, two VAT changes and one combined duty and VAT change on UK alcohol prices, using product-level supermarket price data for 254 alcohol products available weekly. Products were analysed in four categories: beers, ciders/ready to drink (RTDs), spirits and wines.
  
  
  RESULTS
  Within all four categories there exists considerable heterogeneity in the level of duty pass-through for cheaper versus expensive products. Price increases for the cheapest 15% of products fall below duty rises (undershifting), while products sold above the median price are overshifted (price increases are higher than duty increases). The level of undershifting is greatest for beer [0.85 (0.79, 0.92)] and spirits [0.86 (0.83, 0.89)]. Undershifting affects approximately 67% of total beer sales and 38% of total spirits sales.
  
  
  CONCLUSIONS
  Alcohol retailers in the United Kingdom appear to respond to increases in alcohol tax by undershifting their cheaper products (raising prices below the level of the tax increase) and overshifting their more expensive products (raising prices beyond the level of the tax increase). This is likely to impact negatively on tax policy effectiveness, because high-risk groups favour cheaper alcohol and undershifting is likely to produce smaller consumption reductions.
authors: School of Health and Related Research, University of Sheffield, Sheffield, UK.
authors: Abdallah K
authors: AK
authors: Ally
authors: Yang
authors: Y
authors: Meng
authors: Ratula
authors: R
authors: Chakraborty
authors: Paul W
authors: PW
authors: Dobson
authors: Jonathan S
authors: JS
authors: Seaton
authors: John
authors: J
authors: Holmes
authors: Colin
authors: C
authors: Angus
authors: Yelan
authors: Y
authors: Guo
authors: Daniel
authors: D
authors: Hill-McManus
authors: Alan
authors: A
authors: Brennan
authors: Petra S
authors: PS
authors: Meier
mesh_terms: D000428:Alcohol Drinking / Q000191:economics* / Q000517:prevention & control*; D000434:Alcoholic Beverages / Q000191:economics*; D003132:Commerce / Q000191:economics* / Q000331:legislation & jurisprudence*; D003365:Costs and Cost Analysis / Q000191:economics / Q000331:legislation & jurisprudence; D006801:Humans; D013660:Taxes / Q000191:economics* / Q000331:legislation & jurisprudence*; D006113:United Kingdom
keywords: Alcohol excise duty; alcohol pass-through; alcohol prices; alcohol tax policy; alcohol taxation; quantile regression