View from City Road: Lower duties versus livers

The growth in cross-Channel trade in alcoholic drinks over the last year is as alarming for the drinks trade as it is cheering for the drinker. Once the tunnel opens, the tide of alcoholic liquid will run northwards still faster.

The Government has so far turned a blind eye because the direct revenue hit for the Treasury is not significant. But it will be harder to ignore the damage being inflicted on the UK drinks trade, which is affecting much more than the off-licences of Dover.

The organisations behind illegal shipments are sophisticated. Backstreet duty-free warehouses have sprung up, and customers can submit tailor-made orders. The main legal weapon against them is a fine for over-loading a vehicle. Only one in five is being caught selling drinks without paying duty.

Given that the European Union is nowhere near harmonising tax rates, there really is only one effective solution available to the Government if it wants to protect the drinks business and its own revenues - a reduction in duty rates.

This is not as mad as it seems. Tax on drinks is producing diminishing returns, and lower prices lead to higher consumption. Whether that would be good for the nation's livers is another matter.