Vendors fear hike in liquor duty may lead to bootlegging

The 6% additional excise duty on Indian Made Liquor (IML) announced in the state budget has retailers concerned. For, they worry that this measure by the government could encourage illegal liquor trade, or bootlegging.

Suspecting a rise in illegal liquor being sold in various parts of the state, the vendors said an increase in the additional excise duty was a skewed approach to revenue generation.

In his budget speech, Chief Minister B S Yediyurappa announced that additional excise duty on IML will be hiked by 6% on all the 18 slabs of liquor. For the financial year 2019-20, the government had fixed a revenue target of Rs 20,950 crore. Of this, the government was able to generate Rs 19,701 crore. In 2020-21, the government has targeted a revenue generation of Rs.22,700 crore.

With the liquor hike, the government hopes to generate Rs 1,200 crore.

Speaking to DH, General Secretary of the Federation of Karnataka Wine Merchants Association Govindaraj Hegde said: “This is not the right approach for revenue generation for the excise department. The government should focus on curbing the rampant illegal liquor trade. Revenue loss apart, this also has health implications on consumers.”

Every year, there is a 5-7% growth in revenue even without levying additional charges, said Honnagiri Gowda, the general secretary of Karnataka Wine Merchants Association. “If only the government takes measures to curb the illegal trade, the revenue growth will go up to 10%. The department does not have to think of increasing excise duty at all. They should immediately tighten the checkposts and increasing the enforcement. A lot of liquor is illegally brought in from neighbouring states.” he said.

Vendors also feared that the government, which has set its eyes on revenue generation, would push for sale of IML over beer, which is more popular. In the past, too, vendors have complained that the excise department would pressure vendors to sell more IML. While people can consume beer in larger quantities, this pressure to push for IML sales was neither good for the consumer nor for the merchant, the vendors lamented.

The vendors have urged the government to call a meeting of all stakeholders to take feedback on the ground-level situation and come up with measures to tackle illegal liquor trade.