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Mamata's tax policy faces heat

Shine Jacob  |  Kolkata 

The hooch tragedy in Bengal has turned the focus on government’s policies on liquor trade.

Some believe that the state’s decision to increase taxes on country liquor and (IMFL) has made it costlier for the common man, which led to increased sales of illicit liquor.

“There was a rapid increase in excise duty and sales tax since the new government took charge. The cost of liquor has gone up making it unaffordable for the common man. While sales tax was increased by 27 per cent, excise duty was also up 49 per cent,” said Parag Mitra, secretary, West Bengal Foreign Liquor Manufacturers’, Wholesalers and Bonders’ Association ( WBFLMWBA).

It was in August that the state finance minister tabled a Finance Bill, hiking tax levied on IMFL. While Mitra raised VAT from 23 per cent to 27 per cent on foreign liquor sold on MRP basis, without MRP the VAT increase was between 37 per cent to 50 per cent. Reports said the state estimated an additional revenue of close to Rs 100 crore through this.

According to the association, since the tax increase, the state has seen a 30 per cent drop in liquor sales in retail outlets. The price for per 180 millilitre has increased from Rs 55 to Rs 80 since then. Mitra said that out of Rs 80 the customers pay, Rs 60.80 goes to the government as sales and excise taxes.

“The state has a wrong taxation policy and the density of shops should also be increased,” said V N Raina, director general of All India Distillers’ Association. The Left Front was also critical on Mitra’s liquor policy.

“TMC opposed our government, backing the illicit liquor mafia, when we tried to give licences to open retail shops. This is a huge parallel economy that the TMC-supported liquor mafia is running,” said Communist Party of India-Marxist (CPI-M) leader Mohammed Salim.

According to statistics, the state has only four country liquor shops for every 100,000 people, which is one the lowest in the country as far as density is concerned. WBFLMWBA has also demanded that the state government should charge sales tax at retail point, rather than taking it in advance from manufacturers.

“Same is the case with excise duty, they should charge it from the bonders. Both sales tax and excise duty should not be more than 50-60 per cent of production cost. Then only we can serve it cheap to consumers,” he added. West Bengal which has a population of more than 8 million has just 3500 licenced retail shops as per WBFLMWBA statistics.

First Published: Fri, December 16 2011. 00:50 IST