New Delhi, (Asian independent) Raising a red flag against the West Bengal government’s proposed steep hike in liquor prices, the associations of the Indian alcoholic beverage makers have urged Chief Minister Mamata Banerjee not to go ahead with the proposed excise policy which would “kill the industry, leave thousands of people jobless and hurt government’s tax collections”.
In a joint representation to the Chief Minister, the two major liquor associations – the Confederation of Indian Alcoholic Beverage Companies (CIABC) and the International Spirits and Wines Association of India (ISWAI) said: “It is well known that the alcoholic beverage industry is facing an acute fall in sales volumes in West Bengal. Sales were down significantly in the light of the additional levy of VAT of 30 per cent which was imposed after the Covid-19 pandemic broke out, consequently leading to a fall in tax revenues for the government.”
The letter noted that there has been a sharp drop of 58 per cent in sales volumes across segments after the tax was imposed in April 2020 and the ‘AlcoBev’ trade resumed in May 2020. If a 30 per cent increase in consumer prices brought by the imposition of VAT could bring sales down like shown above, it is frightening to envisage what further hiking of taxes on spirits will do to liquor sales in the state and consequently to the government’s tax collections, it said.
Under the proposed policy, consumer prices of the fast-moving brands will go up by 40-90 per cent — translating to Rs 150 to Rs 450 per bottle — as a consequence of the changes in taxation and in the trade margins, the industry bodies said.
CIABC Director General, Vinod Giri said: “Excise policy proposed by the West Bengal Excise department on August 19, 2020 has created great concerns amongst companies. Industry fears that this policy will create undue disruptions and even possible job losses just before the peak Puja times. The proposed policy also uses a deeply flawed concept of inter-state price comparisons because the operating conditions vary considerably across states.”
Noting that the West Bengal government is “one of the most progressive and business friendly governments in the country”, Giri said that if the proposed policy is implemented in the current form, it will lead to a great loss to all stakeholders, the government, the supplier companies, and the consumers.