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Delhi Wine Club
Sinful to impose Sin Tax on Wine

Posted: Monday, 24 December 2012 11:11

Sinful to impose Sin Tax on Wine

December 24 : In a bid to finance combating non-communicable diseases, and reduce consumption of harmful products such as tobacco and alcohol, the government may consider action on a plan document for the 12th five-year plan recommending imposing sin tax on cigarettes and alcohol but it would be sinful to impose such tax on low alcohol products like wine and beer.

 The recommended 12th plan document will be submitted to the National Development Council (NDC) presided over by Prime Minister Manmohan Singh, on 27 December. It proposes to impose a sin tax on cigarettes and alcohol products not only to decrease the consumption of these harmful substances but also purports to help finance a part of the health budget during the 12th five-year plan (2012-2017).

Wikipedia defines ‘sin tax’ as ‘a kind of sumptuary tax: a tax specifically levied on certain generally socially proscribed goods and services, for example alcohol and tobacco, candies, soft drinks, fast foods, coffee, and gambling. Common targets of sumptuary taxes are alcohol and tobacco, gambling, and vehicles emitting excessive pollutants. Sumptuary tax on sugar and soft drinks has also been suggested.’

Investopedia explains further that ‘State governments favour sin taxes because they generate an enormous amount of revenue and are usually easily accepted by the general public because they are indirect taxes that only affect those who use the products. When individual states run deficits, the sin tax is typically one of the first taxes recommended by lawmakers to help fill the budget gap.’

It may be naïve to challenge the sin tax on cigarettes although it is the poorer section that is hooked to the harmful habit who will be affected the most. It is well established that smokers find it impossible to kick the habit once formed. I don’t hold cudgels for the hard liquor industry (they have their own strong lobby) but it would make sense to leave wine out of the ambit of this proposed tax in an attempt to encourage people to switch to the low-alcohol product like wine just as China has done with relative success. Beer could also fall in this low-alcohol category but much higher revenues generated by the industry may be too tempting to ignore.

One hopes that wine will be kept out of the ambit not only because of the increasing number of independent studies that reinforce the positive effects of regular consumption of 1-2 glasses of red wine a day-the latest such study came from Hong Kong last week, indicating that the red wine compounds are anti-aging. The industry is in a state of infancy and the revenues generated would be measly compared to hard liquor and beer sharing over 400 million cases of space enjoyed by about 62 million drinkers. In fact, I would urge the government to consider allowing voluntary printing of the message on the label of each bottle of wine, ‘Two glasses a day may be beneficial but more will be hazardous for health!)

The plan document could also consider such tax on aerated soft drinks, fast foods. There have already been demands and suggestions from many quarters that the government should legalize betting and collect millions of dollars from the taxes generated due to gambling which is rampant in any case.

Although the exact contents of the draft document are not known, the article does point towards the cigarette industry as the major target. ‘The document for NDC says a package of policy interventions would be taken up which includes raising taxes on tobacco, enforcing ban on tobacco advertising in electronic media, counseling for quitting tobacco, early detection and effective control of high blood pressure and diabetes, screening for common and treatable cancers and salt reduction in processed foods’ suggesting that the focus may be on the tobacco products.

According to the article, around 275 million Indians consume tobacco. Around 2,500 people die every day due to tobacco related diseases in India. Alcohol consumption causes 25% of road accidents though there are no statistics that differentiate between beer, wine and hard liquor causing such accidents-one has not heard of any accident caused by heavy drinking of beer or wine though it cannot be ruled out.

In the meantime, TOI continues to show its ignorance and prejudice towards wine. In the article published on Saturday, the graphic in the center of the two-column article shows a glass of red wine with a tag reading TAX rather than a more apt picture of someone dying of cancer due to smoking cigarettes or a vino in the gutter with a glass of whisky and a bottle clutched under his arm. I think it is high time their editorial department looks at articles on wine with the care that needs to be accorded to fine wine.

Tags:  National Development Council (NDC), Sin tax, Alcohol, Tobacco, Sumptuary tax, Red wine, Anti-aging




Mahendra Rustagi Says:

IGPB and wine producer association should very strongly represent before the CONCERNED DEPTT before it becomes a law. otherwise the ailing wine industry will die....another sin

Posted @ December 26, 2012 11:34


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