Karnataka Chief Minister Siddaramaiah’s Budget was welcomed with disappointment by the casual as well as habitual drinkers after the state Government announced a hike in excise duty on alcoholic beverages. This decision aims to boost the state’s tax collection and utilise the revenue generated from tipplers to fund the freebie guarantees promised by the Congress during its desperate bid to win Karnataka.
By augmenting the Excise Duty on alcoholic drinks, the Karnataka Government aims to generate additional revenue streams to support the implementation of the five freebie schemes across the state.
The additional excise duty (AED) on Indian Made Foreign Liquor (IMFL) has been increased by 20%, while in the case of beer, the AED has been raised by 10%, reaching a total of 185%. Also the budget has imposed a 20% duty on all 18 slabs of excise.
Recognising this significant contribution to the state’s tax revenues, the Government has sheepishly aimed to tap into this lucrative source to try and fulfil their freebie commitments. Considering alcohol drinkers as a cash machine, Siddaramaiah stated that alcohol is a good source of revenue and that an increase in price can be afforded by people who consume alcohol.
Karnataka currently leads the nation in excise contribution as a share of the state’s own tax revenues, standing at an impressive 22.9%. This surpasses the 22.3% contributed by Uttar Pradesh and far exceeds the national average of 14.1%. This underlines the critical importance of excise duty, or the tax levied on liquor, for a state like Karnataka.
Although the price of alcohol will be increased in Karnataka henceforth, business owners selling the alcohol will not make any profits out of it. Another issue that will crop up soon is the monumental increase of cost in grabbing a drink at restaurants and pubs.
One thing Congress achieved with this hike is to make Gandhi proud and the Gandhis prouder.