Taxing issues: High duties, higher taxes and related costs are crippling alcohol culture in the country

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New Delhi | August 12, 2018 1:43 AM

Recently, the registration fee for imported wines in Delhi was revised from R10,000 to R60,000, a six-fold jump with no explanations whatsoever.

alcohol, india, cultureHigh duties, higher taxes and related costs, all this is crippling the alcohol culture.

The human civilisation is normally programmed to grow, improve. Synthesis invites anti-thesis, which then breeds synthesis. In other words, an idea is proposed, then opposed and, finally, the two merge and what grows forth becomes the idea for the next round. Round and round it all goes, moving things forward in this spiral dance. That’s pretty much what Darwin’s idea of evolution was based on, improvement for survival.

But certainly, lot of people will soon reverse all that. This lot are not scientists nor doctorate luminaries, they aren’t research laureates nor Nobel prize-contending economists. No, these guys are the people who make and implement rules in India pertaining to the movement of goods, especially the kind, which have an inherent alcoholic percentage.

The customs duties in India on alcohol are a perennial joke. When travelling abroad and asked about this moot point, I, as a sommelier and as an Indian, almost feel ashamed having to share the figure of roughly 250%. It isn’t just high, it is ridiculously and obnoxiously obscene. It is inexplicably daft and retards the growth of the hospitality sector as a whole. But instead of correcting the system, these men are joined by another canny lot, operating at the state level, who then go and find other ways to slap on more levies and taxes on top of these already-vertigo-inducing high duties.

Recently, the registration fee for imported wines in Delhi was revised from R10,000 to R60,000, a six-fold jump with no explanations whatsoever. What something so sudden and unprecedented does is stop people dead in their tracks and prevents them from planning any marketing spends in the coming year. Instead, the focus shifts from bringing in qualitative and valuable wines to cheap plonk, just so to keep costs low and volumes up, all in a bid to write off these hitherto unknown costs.

High duties, higher taxes and related costs, all this is crippling the alcohol culture. Contrary to what many a Gandhian sentiment would like to believe (that this prevents alcohol abuse), it is the main reason behind it. Because, when prices are high, people who are drinking only to render themselves into a right state of stupor, are drinking to chase infinity with finite means. So, they drink cheaper in a bid to maximise volumes. Poorly-made alcohol may not be expensive, but is harmful to the system. Quality drinks, on the other hand, have lesser of those compounds, which cause health issues. By raising levies, one only makes quality alcohol inaccessible, driving people to consume the drivel, which makes them sick, if not entirely blind or worse encore!

But mind you, Delhi is not the only erring state. Gurugram has a monopolistic regime, which is encore worse. Certain states try to control alcohol distribution, but bring more tediousness than efficiency to the system. And let’s not even bother with the whole idea of dry states, where the unofficial amount of alcohol consumed far supersedes that sold in most major metros combined!

Long story short, we need to seriously reconsider our stance on alcohol. Nobody is saying that excess is good, not even the sommelier in the room. But to imagine that raising duties and taxes is the best way to sobriety is like believing that arming yourself with nukes is the best way to disarmament. So, the logic of raising taxes to raise living standards is flawed.

What we need then is a revision. One that makes for freer movement of the goods themselves, but encourages people to trade up. A system that reduces paperwork and burden of living under the licence raj, where young entrepreneurs are constantly being forced to shell out money, both for legal expenses and other “not-so-sundry” payments. We may have been adjudged a great place to do business, but ask anybody in the liquor industry, and you will only be met with surprised nods to the negative.

The writer is a sommelier

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