U-turn on Booze Prices Too?

By Ashwin Tombat
22 March 2020 13:45 IST

Having withdrawn its controversial order imposing Section 144 on North Goa, and having reversed its order notifying 56 villages in the state as urban areas (both of which triggered a huge public outcry), is the Goa government about to roll back its decision to hike the excise duty on alcohol, and do away with its proposed duty hike on Goa’s heritage drink, cashew feni?

On Monday 17 February, North Goa Collector Gopal Parsekar withdrew Section 144 of the Criminal Procedure Code (CrPC) which was imposed the previous week citing alleged ‘intelligence inputs’ about a ‘possible terror threat’ along the west coast.

On Tuesday 18 February, the Chief Minister’s Office (CMO) issued a press statement that the government order which had notified 56 villages as urban areas under the Goa Land Revenue Code, 1968, stood "withdrawn" in view of "public concerns". Earlier, the state Revenue Department had notified these 56 villages as urban areas under section 2 (38) of the Goa Land Revenue Code 1968 (LRC).

Also on Tuesday, Chief Minister Pramod Sawant promised to rethink the proposed hike in excise duty on alcohol announced in the recent state budget, as well as doing away with the proposed duty on cashew feni. Is this the season for ‘U’ turns?

The government had decided to hike excise duties and fees on the sale of all kinds of liquor, including the state’s signature local drink feni, by 20 per cent to 50 per cent, in the annual state budget. The hike was to be implemented from 1 April this year, to augment the state exchequer. The government also proposed to revise the licence fee for bars, restaurants, stores and supermarkets selling liquor. The liquor industry estimated that it would raise prices sharply; between 20 per cent to 50 per cent.

Power Minister Nilesh Cabral appreciated the move to hike the excise duty on liquor and feni. He said people came to Goa not to drink but to enjoy its natural beauty, get a feel of the place and socialise. He said that there were five other states in India where people could get alcohol cheaper than in Goa.

The bottom line, though, is that Goa collected Rs477.67 crore as excise revenue during financial year 2018-19; a healthy 16.5 per cent increase over the previous year, suggesting that liquor does have a strong connect with the tourism trade. In fact, with the proposed hike this year, the CM was expecting to garner an additional excise revenue of Rs100 crore, up by nearly 25 per cent.

Members of the liquor retail industry in the state strongly disagree with Mr Cabral. They gave a sharp thumbs down to the government’s proposed increases in excise duties on all wines, beer, IMFL, country liquor, foreign liquor, and other alcoholic beverages.

“It will make liquor costly and have a major adverse impact on tourism,” said Dattaprasad Naik, President of the All Goa Liquor Traders Association (AGLTA). He said that liquor in Rajasthan, Madhya Pradesh, Punjab, Haryana, Delhi and Chandigarh was cheaper than in Goa, and if prices went up, the state was in danger of losing business on tourists coming from north India.

He claimed that if prices increased by the 20 per cent to 50 per cent proposed in the Budget, far from gaining additional revenue, the state could suffer a double whammy –  Goan consumers downgrading to cheaper brands and tourists coming to the state with their own bottles…!

Mr Naik may or may not be correct.

First, the relationship between the price and overall demand for liquor is not as straightforward as with other commodities. For example, the state with the highest alcohol taxes and, consequently, the highest prices of liquor in the country – Kerala – also has among the highest per capita rates of liquor consumption in the country. Second, no matter how much Mr Sawant increases the taxation on alcohol in Goa, liquor here will still be cheaper than in our two neighbouring states of Maharashtra and Karnataka.

Be that as it may, after meeting with representatives of the Goa Liquor Traders Association, the CM said that he would ask the Excise Commissioner to recalculate the tax slabs on alcohol which he had proposed in his budget.

In fact, what Mr Sawant really needs to do is to bring in a radical new alcohol policy, in which tax is reduced on beverages with low alcohol content like beer and wine, but simultaneously increased sharply on hard liquor. This would encourage consumption of low-alcohol beverages and discourage consumption of high-alcohol spirits. Young people would prefer to drink beer and wine, rather than whisky and vodka. Overall, it would be better for the public exchequer as well as for public health.

First published in Lokmat (Marathi) Goa edition on Sunday 23 February

Blogger's Profile

Ashwin Tombat

Ashwin Tombat has been the Editor of Gomantak Times and Herald. Worked as an Associate Editor of national magazine Gentleman in Mumbai, before shifting to Goa. Loves sailing, also participates in Marathons. Has worked as an activist in students's union and trade unions in Maharashtra. Also an artist of Street Theatre during student days.

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