Corona cess imposed on liquor resulted in 59% decline in sales post lockdown: CIABC

Bengaluru: States which imposed Corona cess on liquor saw sale of alcohol going down by more than half during relaxation in lockdown, said liquor apex body Confederation of Indian Alcoholic Beverage Companies (CIABC) that represents Indian liquor manufacturers such as Allied Blenders & Distillers and Amrut Distilleries. According to their latest report, the states which imposed nil or moderate Covid taxes (0-15%) saw their sales fall by 16% while those which levied Corona tax by over 50% saw their sales dip by 59%. Many state governments, which had noted their revenues plummet amid the lockdown to contain the Covid-19 pandemic, had increased tax on alcohol by up to 75% of maximum retail price to boost their coffers since the Centre allowed reopening of liquor shops in the first week of May. While comparing May and June data when liquor trade reopened after six weeks of complete closure of liquor vends, CIABC categorised states into three categories as per Corona cess levied by multiple state governments. The first group of states which levied up to 15% Corona tax included Uttar Pradesh, Uttarakhand, Telangana, Karnataka, Chhattisgarh, Haryana, Tamil Nadu, Himachal Pradesh, Maharashtra, Assam, Chandigarh, Madhya Pradesh, Goa and Punjab. The second group of states with 15-50% Corona tax comprised Arunachal Pradesh, Meghalaya, Rajasthan, West Bengal, Kerala and Jharkhand. The third group of states with above 50% Corona cess were Andhra Pradesh, Odisha, Jammu & Kashmir, Puducherry and Delhi.“Comparing data for the month of May and June vis a vis previous fiscal clearly shows the sale of alcohol in the first category of states fell by 16%, in the second by 34% and in the third by 59%,” said CIABC director general Vinod Giri, adding, “This clearly indicates that levying of hefty Corona tax did not lead to an increase in total tax collection. In fact, the trend in sales recovery in June, when unlocking began, was stronger in states that imposed lower tax increases.”According to the CIABC, the total liquor sales in these three categories of states stood at 5.87 crore cases last year same period. This year, it dropped 25% to 4.37 crore cases of liquor. In the states levying up to 15% Corona tax, the sales dropped 16% to 3.42 crore cases. States with 15-50% additional tax noted a fall of 34%. Those states that levied above 50% Corona tax saw a steep fall from 91.34 lakh cases to 37.79 lakh cases, clocking a drop of 59%. Based on this report, CIABC has urged state governments to reduce the Corona cess on liquor to a sustainable level stating that heavy taxation has proved counterproductive as it results in decline in sales and downtrading. “High taxation in some states has led to steep fall in sale of liquor, while the delay by the government in opening bars and restaurants, which account for up to 10% of liquor sales, will further aggravate the situation,” added Giri. Two months ago, CIABC had submitted similar analysis to the governments of Delhi, Andhra Pradesh, Odisha, West Bengal and J&K. Delhi, Odisha and J&K have subsequently rolled back tax increases.Liquor attracts the highest taxation of any beverage in the country, with more than half the retail price going to state and central governments through value added tax (VAT) and excise duty. In FY19-20, Indian states had earned a combined Rs 1,75 lakh crore from excise, and liquor accounted for nearly 10-12% of the overall revenue.