Bowing to mounting pressure from the hospitality and liquor industries, the Maharashtra government has asked the excise department to review the proposed 50 per cent tax hike on alcohol, sources in the department said.
Mumbai Mirror had reported on February 12 that the state government had proposed a 50 per cent increase in the licence fee for permit rooms and liquor stores, following a review. Though the state policy mandates a 10 per cent annual hike, the state had not touched the licence fee for the last three years. The decision was taken following a meeting between the chief minister and the deputy CM.
Consequently, the annual licence fee was to go up from Rs 3,66,000 to Rs 5,44,000 for permit rooms and from Rs 95,000 to Rs 1,50,000 for liquor stores, leading to protests from the industry.
Several hospitality associations approached the government pleading that the proposal was regressive and that it would sound the death knell for the industry in the state. Bowing to their demands, the state government has now sought the opinion of all departments concerned.
"The government has approached the excise commissioner, too, asking whether the fee should be reduced," said a senior department official who did not want to be named. "a decision will be taken soon."
Dr Sanjay Mukherjee, excise commissioner, refused to comment. Others in the department said even they were flooded with pleas from the industry. "This decision was made by the government," said an official. "Our department had little to do with it. But we are also flooded with petitions demanding a rethink."
Gurbaxish Singh Kohli, vice president, Hotel and Restaurant Association-Western India, claimed taxes levied by Maharashtra was the highest in country.
"The industry cannot bear any more burdens," he said. "If the proposed hike comes into effect, many hotels will shut down. As it is, customers have been complaining of high costs. Any more increase and they will stop visiting permit rooms. This does not mean they will stop consuming alcohol; it will merely result in customers opting to drink at home or shifting to spurious liquor or country liquor."