Liquor makers urges Delhi government to withdraw 70% additional tax

Liquor makers have urged the Delhi government to withdraw 70 per cent additional tax imposed on liquor in the city, calling the move 'counterproductive'.

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The price increase, after the demand surge is over, would lead to decline in sales and also encourage illegal supply from neighbouring states, having lower price, the Confederation of Indian Alcoholic Beverage Companies (CIABC) said in a letter to Delhi government.

"In our understanding this decision may perhaps have either or both of two objectives – one to raise more revenues for the government and two, to manage crowd at liquor outlets," CIABC Director General Vinod Giri said.

"It is our humble view that this decision may prove to be counterproductive and suboptimal for both objectives as explained below," he added.

Once the initial surge of panic purchase is over, this kind of price increase will have strong adverse effect on sales in Delhi, he said.

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"It will be further compounded by free flow of unlawful liquor from neighbouring states which have much lower prices. Such drastic price increase cannot sustain demand in Delhi, especially with cheaper options available across the border, and will actually be counterproductive," the association said.

It asked that the 70 per cent tax be "treated, at best, as a very short term measure".

"We, therefore, request you to kindly withdraw 70 per cent cess as early as possible," CIABC said.

The Delhi government had imposed a 70 per cent special coronavirus fees on sale of liquor on the maximum retail price from May 5.

According to the association, barely 50 of the 800 liquor retail outlets in the city were fully operational on the first two days after sale of liquor was allowed during the lockdown.

Besides, all the bars in the cities are shut due to the coronavirus pandemic.

CIABC suggested increasing the number of liquor shops immediately by allowing opening of all shops outside containment zones on the basis of self verification and those in malls which have independent entrances.

Besides, it has asked to allow bars to sell liquor as they have unsold stock which will help in improving product availability.

It has also suggested to allow online sales to keep crowd away from shops and to reduce human contact during the lockdown period.

"Chhattisgarh, West Bengal and Punjab have already passed orders for such systems. Based on experiences elsewhere in the world, this can take 15-20 per cent customers away from shops. This is also more robust process where product can be traced from warehouse to the customer electronically," it said.