Following the footsteps of the Delhi Government and Andhra Pradesh Government, the Karnataka government hinted at imposing a COVID-19 tax up to 15 percent on alcoholic beverages. This is an addition to the already announced 6 percent excise duty announced in the budget.
Once the restrictions on the liquor shops were relaxed on Monday on the first of the third phase of the lockdown due to coronavirus outbreak. In the first two days, the Karnataka state saw the record sales that have encouraged the government to open up 450 more liquor outlets run by the Mysore Sales International. Private players are also applying for new licenses to start up outlets.
According to the sources, the government is said to have lost close to 2,600 crores in excise revenue because of the lockdown. This move is likely to make up for these losses. The sources also say that the government is likely to take a final decision on the COVID-19 tax in the next week.
Over 285 crores of profit expected
A 15 percent tax on liquor could make the cost of one liquor bottle of Rs. 1000 to Rs. 1150. As per the sources, with the increase in tax, the government is likely to garner from Rs. 95 crores to Rs. 285 crores more than it would earn generally of Rs. 1,900 crores per month. This calculation comes from the sales the state records from retail shops and MSIL outlets that have now got permission to operate amidst the COVID-19 outbreak. This does not count the pubs, bars, and hotels that are yet to open.
H Nagesh, the Excise Minister spoke to the media and said that the government is exploring the avenues to make more revenue and with the intent of recovering losses the government has incurred. Reportedly, the senior financial officials are said to have met with industry stakeholders about the new tax proposal. Arun Kumar Parsa, the President of Karnataka Brewers’ and Distillers’ Association, said,
“The government has the mandate to impose the tax, but it must not overburden consumers. The tax rate should be logical and scientific.”
G Honnari Gowda, the President of Karnataka State Wine Merchants’ Association said,
“The government should also consider issuing new retail licenses to unemployed graduates as it would generate jobs and bring in more revenue.”
Source: The Times of India
