Govt eyes liquor tax hike to rope in funds

Excise dept expects Rs 3,500 cr this year

Bacchus lovers recovering from the hangover of the New Year festivities may get a virtual shock in the coming weeks if a section of decision makers in the Arvind Kejriwal government, who are open to the idea of raising tax on liquor for generating additional revenue, manage to have their say.

The new government has taken on a burden of Rs 240 crore subsidy by way of sops related to free water supply and reduction in consumers’ power bills by half. 

Since more welfare spending by the Kejriwal government is expected in the coming weeks, there is a strong possibility that a major chunk of the additional revenue needed to support the decisions may be generated by jacking up booze prices.

“Prices of at least liquor should go up. If not for revenue generation, for dissuading people from staying away from alcohol,” said a senior member of the decision making team of Kejriwal. 

Sources said the Delhi government could toy with the model of the West Bengal government to jack up prices of liquor after coming to power. 

“Taxing liquor is the common way of raising funds for any administration. If a need arises, this could also be the Delhi government’s approach,” said a senior government functionary, indicating that an informal discussion has already taken place in the Kejriwal cabinet on the need to generate more revenue. 

The Delhi excise department, whose primary task is to regulate import and supply of liquor, is expecting to collect a revenue of close to Rs 3,500 crore this year as compared to Rs 2,869 crore in the year 2012-13.

Delhi has nearly 690 retail outlets that sell alcohol, including 379 government shops, 90 private-owned standalone liquor stores, 103 government-owned, country liquor shops, 77 shops inside malls and 41 department stores.

The excise department grants L-1 licences to distilleries and bottling plants for the wholesale supply of IMFL and beer in Delhi, while retail liquor trade in Delhi is mainly in the hands of the government undertakings for which a separate licence in form L-2 is granted.

One such government retailer is Delhi State Civil Supplies Corporation Ltd, whose liquor sales touched Rs 808 crore in 2012-13. 

The total liquor sales of the corporation in 2006-07 were Rs 377 crore, which doubled over the next six years.  

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