The state government’s recent decision to hike the license fees on alcohol trade, quiet predictably, hasn’t gone down all too well with the liquor industry. At the root of the anxiety and fear surrounding this decision is the worry that Goa might begin a gradual journey on the path adopted by other states in dealing with the liquor industry.
In other states, liquor license is not only prohibitively expensive, but it is also very difficult to secure. The reason is quite obvious. In most parts of India, consumption of alcohol is a taboo. As a result of which state governments elsewhere have historically sought to discourage liquor trade by making it tough to get a license and through exorbitant license fees.
However, in Goa, social drinking is culturally more acceptable than in the rest of the country, for various reasons. This trend has perhaps formed the basis of the liberal approach adopted by successive governments towards liquor trade.
CEOs of most alcohol companies operating in India will admit openly that it is much easier to do liquor business in Goa than in the rest of India. That the picture is diametrically opposite in context of other industries is a different subject.
Liquor traders have stated that a marginal hike would have been welcome. What has irked them is that license fees have been doubled for certain categories while for certain other categories; it has been increased by 50 per cent, which is an equally painful pinch.
Certain experts have expressed the belief that the significant increase in license fees has resulted from the fact that alcohol related taxes are now the only taxes within the state government’s control since the roll-out of Goods and Services Tax (GST) regime last year.
Presently, GST has subsumed most of the taxes. Now, it is the GST Council, under the central government, which can change most tax rates and not the state government. Due to this, state governments in India have power over only few taxes and liquor-related taxes are one of them.
In such situations, if the state government is in need of more tax revenue, enhancing the tax on alcohol is one of the few options left with it. However, while doing so, it would be wise to consider the other side of the situation as well.
A steep increase in license fees year after year in this manner will push the rates of alcohol higher and higher in the state. Buyers would then be few and consumption could dwindle gradually, like in the rest of the country. Eventually, Goa will not be a preferred destination for liquor industry to do business. The government, therefore, ought to choose wisely and exercise caution before taking decisions like rampant hike in license fees for alcohol.
