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Study into the feasibility of implementation of the MUP in the Netherlands

6 July 2021

The Dutch government is considering whether to implement MUP. As MUP directly targets persons who drink too much, it is a promising measure for reducing problematic drinking. However, the effects of MUP depend on the minimum unit price that has to be paid. The government has not yet determined this. It is also important to provide clear information about the measure. This was the conclusion of a study carried out by the National Institute for Public Health and the Environment (RIVM) and the Trimbos Institute.

It is also evident that stakeholders - including consumers, producers, vendors, and health experts - have differing opinions about MUP. Many stakeholders recognise the positive effects on health, but others also see drawbacks. The arguments presented by the alcohol industry against implementing the measure are primarily of an economic nature, such as less turnover. Some of the parties interviewed also think that problematic drinkers will start using other addictive substances such as drugs. Furthermore, persons living near the border could buy alcohol more cheaply in neighbouring countries. There is, by the way, no proof in support of these arguments.

If MUP is implemented, the government sets a minimum price for one unit of alcohol (one standard glass of beer, wine, or spirits). Vendors are not allowed to offer alcohol below this price. If the government sets a lower minimum unit price, the measure will apply only to the cheapest products. If a higher MUP is chosen, more expensive products will also be affected and therefore also a bigger segment of the alcohol products on offer. For example: a minimum unit price of 45 cents would make approximately 50% of all alcohol products more expensive. At a minimum unit price of 55 cents, that would be approximately 65%. An increase in excise duties would make all alcoholic drinks more expensive.

RIVM calculated five policy scenarios for pricing policy and mapped out the costs and benefits:
1. A 50% tax increase
2. A 45 cent MUP
3. A 55 cent MUP
4. A 50% tax increase and a 45 cent MUP
5. A 50% tax increase and a 55 cent MUP.

All policy scenarios show that the costs due to the smaller consumer surplus are high for all price measures. This is not an unexpected finding, as consumers will never be happy with price increases of their commonly used products. All policy options do provide additional health, as well as savings in the domains of health care, education and the police and justice system.

If the government increasing the excise rate, both consumers and providers will 'pay' for the intervention in terms of loss of consumer and producer surplus. If a MUP is introduced, the consumers of alcohol experience a decline in consumer surplus, but the alcohol providers do benefit. For providers, the decline in the demand for alcohol is expected to be compensated by the higher price that providers receive for their products.

Bron: rivm.nl.

minimum-unit-pricing-voor-alcohol---onderzoek-naar-de-haalbaarheid-van-invoering-in-nederland_1.pdfminimum-unit-pricing-voor-alcohol---onderzoek-naar-de-haalbaarheid-van-invoering-in-nederland_1.pdf (1,84 MB)

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