Diners froth as city restaurants & bars hike liquor rates by 75%

MUMBAI: Party animals and even those who enjoy the occasional drink and meal out are in for some gloom. Not only has the hike in the price of liquor beginning April 15 thrown entertainment expenditure out of gear, even the comfort of air-conditioners could soon be a thing of the past. To cope with increasing taxes and to avoid hiking prices further, restaurant and bar owners are thinking of doing away with ACs, which invite a special central government tax.
After the central and state budgets imposed new taxes at the beginning of this financial year, the retail price of Indian-made foreign liquor (IMFL) brands went up by 40% to 56%.The hike on beer is a minimum 18% to 49%. The hike takes the prices of IMFL bottles up by 133% to 233% more than their prices in the neighbouring state of Goa.
“In bars, pubs and restaurants, the hike will be even greater—it could be beyond 75%,” said Sudhakar Shetty, President of Ahar, an association of over 8,000 Indian hotels, restaurants, permit rooms and bars in the Mumbai region.
Added Sukesh Shetty, secretary of Ahar, “The 2011 Union budget’s service tax of 10.30% on air-conditioned hotels serving liquor has already taken up prices. We fear the new taxes will affect the business of permit rooms throughout the state and encourage bootlegging. Not only will this result in a huge loss to the state exchequer, the spurious liquor will endanger lives.”
Aniruddha Rao, owner of a restaurant in Malad, is also dismayed. “Every time there’s a hike, we can’t pass it on entirely to consumers,” he said. “We are already losing clients and will lose even more now.” Added Sudhakar Shetty, “Over 500 restaurants have shut down in the past few years because of severely dwindling profits. The hotel industry, which generates crores of rupees by way of VAT, licence fees and service charges for the government, is unable to absorb this hike and will be left with no option but to shut down. This will affect lakhs of people employed in the business.”
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Ahar and its sister affiliates across the state are contemplating a strike to protest the hike in taxes. “If the exorbitant hike is not withdrawn, the Association will give a call to all its permit room hotelier members in Mumbai as well as other sister associations throughout Maharashtra to down their shutters in protest,” said Sudhakar Shetty. The Ahar President added that restaurants were seriously considering removing air conditioners to avoid the service tax. Shetty has requested the finance minister to roll back the unjustified hike in VAT so that the hotel industry survives.