Many states have started the sale of liquor in the lock-down 3.0, that’s when many thought it was not a good decision during the pandemic. So let us have a look at why the states have started this.
Firstly due to lock-down all states revenue has fallen to almost nothing. So where do they get revenue from. There is an images from Times of India that breakdowns the various sources of income that a state gets.
So we can see in the above image state own tax revenue is about 46%. That 46% comprises of State GST, VAT(fuel), Excise(liquor), Property, Vehicles etc. So we all know that during lock-down many automobiles reported zero sales which means there is no vehicle tax. Also people are staying in home which means very less fuel taxes. No sales of property also.
So a government will think to boost its economy will go for liquor since all the others are more risky than this one and they get good revenues. Also many governments have already increased taxes on liquor so that less people buy it. Also governments like Telangana warned people that if the physical distancing norms are not followed then no liquor would be on sale with immediate effect.
So actually governments must try to boost their economies. Some ways include increasing tax on petrol/diesel since these prices went into negative due to no demand. Also salary cuts for government employees is another option. Cost cutting wherever possible which can be either delayed or cancelled for time being so that we can go further when the economy is good.
If you are reading this article, please suggest in comment section the ways government can increase their revenues.