Booze may get dearer as Karnataka CM under pressure to hike duty | Bengaluru News – Times of India
Yediyurappa, who is expected to present the budget in March first week, is also under pressure from manufacturers and traders to increase their share of revenue. While manufacturers want an upward revision of price slabs by at least Rs 100 per slab, retail traders are asking the government to increase their sales commission from 10% to 20% on MRP.
If the CM chooses to increase the duty and meet the industry’s demands, liquor will get costlier. A 180ml bottle of the cheapest brand may cost Rs 20 more, while prices of premium brands may go up by Rs 500-Rs 1,000 per bottle.
“We are receiving inputs from all stakeholders and they will be presented to the chief minister at the pre-budget meeting on February18. It’s up to him to take a call,” said excise minister K Gopalaiah, who convened a meeting with traders on Tuesday.
There are 18 price slabs, each attracting different rates of additional excise duty (AED). Yediyurappa increased AED on all slabs by 6% in the 2020-21 budget and subsequently increased it by 17%, 21% and 25%, respectively, on the low, medium and premium slabs in order to fund Covid-19 operations. Since liquor sale is the only source that is expected to fetch the expected revenue and meet the 2020-21 target (Rs 22,700 crore), the CM is under pressure to cash in on it. He’s also expected to increase the target to around Rs 25,000 crore for next year.
The price slabs have not been revised for over five years, said Arun Kumar Parasa, president of Karnataka Brewers and Distillers Association. The government wants manufacturers to change their base prices on their own without waiting for it to alter the slabs. Either way, the prices will go up.
Excise department officials, however, are concerned that higher prices may have a negative impact on consumption. They pointed out consumption is down by 7% in the current year (probably a fallout of the Covid-induced lockdown) and may fall further if prices climb.
“Also, it may lead to social problems as people may be forced to divert a chunk of their incomes to buy alcohol. It would be a problem, especially for the poor. The better way is to ensure more legal consumption through strict enforcement. That will ensure more revenue even without hiking AED,” said an official.