New excise regime comes into effect
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Prelims·
Why in news
The Karnataka government implemented a new excise regime on May 11 to tax liquor based on social costs, aiming to discourage high alcohol content consumption.
Background
The Karnataka State Beverage Corporation Ltd. (KSBCL) will automatically calculate prices based on alcohol content and excise duties. The social cost of alcohol is estimated at ₹1,200 per liter in 2024-25, with a projected increase to ₹2,000 per liter by 2028-29.
Facts for Prelims
- FactSocial cost of alcohol in Karnataka is projected to reach ₹2,000 per liter by 2028-29
- BodyKSBCL (Karnataka State Beverage Corporation Ltd.) is the body responsible for price calculation under the new regime
- PlaceThe new excise regime is specific to the state of Karnataka
For Mains
Q. Discuss how taxing liquor based on 'social cost' serves as a fiscal tool for public health and behavioral change in India.
Dimensions to cover in your answer
- Fiscal-Health Nexus: Balancing state revenue generation with the objective of reducing public health expenditure on alcohol-related issues
- Price Elasticity: Potential for lower-end liquor price hikes to impact marginalized demographics vs premium label price drops
Keywords: Fiscal Policy · Social Cost · Excise Duty · Public Health · Behavioral Economics
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