With the goal of encouraging the consumption of healthier beverages, the Maharashtra government has established a committee to evaluate the feasibility of reducing taxes on beer. This strategic move aims to boost beer sales and generate additional revenue. The committee’s approach involves examining tax structures in other states for valuable insights.
A recently issued government report revealed a significant decline in beer sales following the most recent state excise tax hike, leading to a decrease in government revenue.
As per the government report (GR), beer was found to have a lower proportion of pure chemical spirits compared to hard liquors, and when evaluating taxes based on the pure spirits content, beer carried a higher tax burden than hard liquors like rum, whisky, vodka, and gin.
Throughout the world, especially in Europe, the United States, and Southeast Asia, the promotion of beer and wine is grounded in their natural fermentation processes, with a substantially lower pure chemical spirit content (up to 14%) in contrast to hard liquors, which typically feature 42% pure spirits.
The country’s brewing associations have drawn the government’s attention to the issue of dwindling patronage for beer, citing the higher taxes imposed on it, despite its lower pure spirit content, as reported by the GR.
The GR has additionally highlighted that various states experienced increased revenue after reducing taxes on beer. The formal recommendations will be made by the study group led by the additional chief secretary of excise after conducting its own comprehensive research.
The committee, comprising the excise commissioner, deputy secretary of excise, a representative from the All India Brewers Association, and the additional commissioner of state excise, has been tasked with delivering its report along with recommendations within the span of one month.
