Mumbai: alcohol and tax are a deadly cocktail

According to reports, 102 people have now died in Mumbai after drinking tainted illegal alcohol. Those responsible for producing this deadly brew should be punished with the full force of the law, including officials who may have turned a blind eye for personal gain. But the real roots of this disaster lie in the prohibitionist and protectionist tendencies of government.

The reason that poorer people turn to illegal liquor is that they can’t afford the legal variety. As one news report notes: ‘Deaths from illegally brewed alcohol are common in India because the poor cannot afford licensed liquor. Illicit liquor is often spiked with chemicals such as pesticides to increase its potency.’

According to the Times of India: ‘Till 2011, the state excise for IMFL [Indian-made foreign liquor] usually amounted to 25 per cent of the final cost of the product. But budgets since then have ensured that it goes up to 60 per cent of a product’s cost and beyond. After the excise hike, regular brands are now over 40 to 60 per cent costlier, while premium brands are 25 to 40 per cent costlier and so are the mild beers.’ It’s even worse for imported alcohol. As an article last year in the Guardian noted: ‘Import duties on foreign wines and spirits are a minimum of 152 per cent in India, so to avoid paying £10 a bottle for plonk, drinkers turn to the bootlegger.’

The well-to-do who want to save money can take advantage of various loopholes. For example, foreign embassies are allowed a duty-free allowance. For the embassies of teetotal countries, that can be a lucrative little earner as the booze is flogged to middlemen. That’s not so easy for the poor. As the president of India’s hotel and restaurant association pointed out: ‘[Over the past three years,] taxes are going up, making top IMFL brands the costliest. People are shifting to cheaper varieties, thus giving rise to the old practice of handmade liquor-brewing in slums.’

Illegal and bootleg booze means little quality control, leaving customers open to all sorts of nasties. It would be far better to make legal, branded liquor affordable. But drinkers are an easy target for taxation because governments can justify such levies on the basis of health and maintaining public order. As long as governments continue to soak drinkers for tax, and price poorer people out of legal booze, people will turn to moonshine, whatever the risks. And that’s not exclusive to India. Even in the UK there are regular reports of dodgy alcohol being found by trading-standards officers – booze that appeals to those who want to get a cheap drink. So much for protecting public health.

Rob Lyons is campaigns manager at Action on Consumer Choice.