You see a Pizza advertisement stuck on the windshield of your car, or at the gate of your house, or probably sent through some digital media. In the advertisement you look at an appetizing Pizza priced at Rs 199. A college student with limited amount of pocket money takes the bait, finds the deal not only appetizing but also easy on his limited pocket. He goes and orders the Pizza, however, to his shock and surprise there are some exorbitant taxes that have been added in the price that were conveniently not mentioned in the advertisement, or written in some inconsequential area of the advertisement as part of fine print. Ok this example was set in Goa.
For a moment, let’s assume this same college student has gone to Bangalore, orders the same Rs 199 Pizza, pay’s the tax, but not as much as he was made to pay in Goa. Without going into the technicality of VAT a simple question the college-going student might ask. Why does Goa charge higher tax on Pizza’s as compared to Bangalore? The straight answer could be that in order to counter obesity the Government of Goa uses taxation as a ploy to discourage consumption of junk food such as Pizzas. The Goa Government rationale behind this move might be smart and with all the good intentions to discourage Generation Next from getting hooked on to Pizzas. If that is the case, and not because of some budgetary compulsions, then the Government of Goa deserves kudos for this bold move of taxing heavy on junk food, so as to exercise some (not total) influence on the eating habits of Goans and indirectly addressing obesity, that is a scourge in our society these days.
If governments are so sensitive, then how come past Goan governments never bothered to use the same pizza logic in taxing alcohol products? Unless they actually think that alcohol is healthier then junk food. Well let’s not get into the pizza versus alcohol debate, but it has to be noted since liberation, taxes on alcohol have been kept intentionally low compared to other states of India. It might have been done probably to entice tourists from these states to come and get drunk.
While it’s all fine to keep taxes low on certain key commodities that has the potential to attract more visitors, but nobody seemed to have realized that low taxes on branded alcohol products have worked against the local Goan feni producers for example, as they are unable to unlock value for a product that has huge potential to make these producers wealthy. It then became a vicious circle, the feni producers could not scale up their business due to lack of finance and in the process could not compete with large players that had the advantage of scale and passed the price benefit to the customers. This is just the commercial aspect of it, what happened to the government moral aspect which they seem to have used on taxing the consumption of junk food.
Well it could be that the past politicians in charge of making policy were not as smart as they ought to have been, or it could be a crooked theory to keep most Goans intoxicated so that the crooks not only rule Goa but frame rules of business that made them and their close friends rich, while the general public stayed high on the hardly taxed booze. After all an intoxicated Goan who drinks afternoon and evening is easy to manipulate since he will not remain as sharp as compared to someone who stays sober the entire day.
If politicians are crooked now, why should we believe that politicians were not crooked in the past, so-called glory days? It is here that the role of historians comes into play, historians who have the responsibility not only to report facts, but also have the ability to question it. Really no idea which set of politicians were responsible to keep taxes low on alcohol products in Goa, but thanks to our ignorance, we might have already classified them as men of great vision, little knowing that a small move of keeping taxes low on alcohol not only changed the habits of Goans but tilted the scale against the local alcohol industry.
Let’s be fair and give credit where it is due, the present Defence Minister of India and the then Chief Minister of Goa’s move of cancelling the entire VAT proportion in petroleum products was an excellent move. It not only insulated Goans from the spiraling global oil prices which India had no control of, but also helped Goans in tackling high inflation at the time. Taxation can be used not only to protect its citizens from external shocks which they have absolutely no control, but the government’s intention can also be known.
More than intentions, taxation should be used to encourage the local industry. While making sure that fair competition exists and the customer never gets a raw deal or is taken for a ride. Taxation policy must always remain dynamic and need sharp politicians capable of calibrating it all the time as per local market requirements. Some serious thinking is now needed from real men of vision since alcohol products are still going to be out of GST. Can we see any politician raise his hand with a solution to protect the local alcohol industry?
(The author is a business
consultant)
