Tax hike unlikely to impact bar prices

Chief Minister H D Kumaraswamy imposed an additional excise duty on Indian Made Foreign Liquor (IMFL) by 4 per cent on all 18 slabs in the budget presented by him last week. This was over and above the existing excise duty introduced by the previous government. The step was taken to mobilise resources for fulfilling the promise of farm loan waiver.

The hospitality department is not too happy. The new rule means that apart from the other taxes added to a customer’s bill, there will now be a total of 12 per cent excise duty on IMFL drinks.

Hold that thought though — there’s not much to worry about, yet. Most of the restaurateurs aren’t planning to increase the food and drink prices immediately.

Dilip Nair, director operations of ‘1131 Bar + Kitchen’ and ‘House of Commons’, explains, “It’s not possible to convert the new rates to customers every time there is a new rule. While some people might not worry too much about paying that extra amount, there is still a large community who prefer to spend their money carefully. Keeping that in mind, it’s us, the restaurateurs, who will feel the pinch each time.”

While the exact date of the new rollout hasn’t been announced yet, many are expecting the revised prices on IMFL drinks by August. Director of Byg Brewski Pravesh Pandey says that this is an additional burden on restaurateurs.

“We already have problems regarding music performance license, distance from highways and so no. If I’m not wrong, the alcohol prices in Delhi and Mumbai will now become lower than that in Bengaluru. The industry here will have to now have to take the hit to keep the large drinking community happy.”

Byg Brewski is not planning to increase their menu prices for at least six months as they opened only a month ago.

“We recently printed our new menu and customers are still warming up to the place; we wouldn’t want to enforce a change on them anytime soon,” he adds.

Restaurateurs hope that the hospitality industry will be taken more seriously as it is a booming one. Pioneers fear that newcomers might not want to explore this world if the government keeps throwing obstacles.

Owner of AA Hospitality Amit Ahuja vents, “As restaurant owners, many of us don’t get to take care of the place because we are constantly running between government offices for permissions. It could be anything from the fire department, BBMP to pollution control, and now this. There are no clear guidelines for this industry. And these are not excuses that we can tell the customers; they come to us a for a good experience and they expect to have it no matter what is going on in the backend.”

His restaurants ‘The Open Box’, ‘Misu’ and ‘Housefull’ are also not planning to increase the menu prices after the announcement.

He says, “Right now, we are just trying to find out what the hikes are going to be and which IMFL drinks fall under the category. We have been told it’s only draft beer for
now, which is still a bit unclear.”

Watch out

The revised rate sheets will be announced next week by the excise department.