#AskFabiani – on minimum pricing

Question:

Why are cans of Mountain Dew 99p and cans of Irn Bru 49p?

Answer:

You know, there are some questions that politicians just can’t answer, and shouldn’t even try to.

Companies set prices for their products using many different factors, including cost of production; competition; target market; sometimes even as a ‘loss leader’ to attract customers.

We all buy products like fashionable clothes, cosmetics, and others, where the price we pay appears to bear no relationship to the cost of production. Indeed, part of the reason for buying some products is that they are exclusive (and probably a bit too expensive).

As politicians, our interests in the price of products should be limited to solving problems; using the tax system, or price controls, to tackle environmental damage, health impacts of products etc.

If Mountain Dew and Irn Bru contained alcohol, I would argue that it is not in society’s interest to have them available too cheaply.

Politicians could stop the sale price of alcohol falling too low (which it has done for some products) using the tax system, which Labour at Westminster refused to do, or a minimum price mechanism, which Labour at Holyrood stopped the SNP from doing over the past four years.

The consequence of having alcohol available too cheaply is seen in our prison cells, in accident and emergency units every Friday and Saturday night, and in the wards of our hospitals as they deal with the long-term health effects.

Linda Fabiani
May 2011

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