The Bihar government now appears to be feeling the pinch of prohibition in the state as the revenue earning has taken a sharp dip.

Commercial tax revenue has dipped by over 35 per cent, from Rs 3,666 crore to Rs 2,372 crore in the first quarter of the current fiscal in comparison to corresponding period during the last fiscal.

KEY HIGHLIGHTS The excise revenue has also come down drastically from Rs 897 crore in the same period last year to Rs 42 crore this year. Facing severe financial crisis, the Bihar government last week increased VAT on all the items in the state from 50% to 1% on existing VAT rates. With the increase in VAT rates, the state government is intending to mop up Rs 1000 crore to neutralize the losses caused due to prohibition. The state government till last fiscal year was earning close to Rs 5000 crore only from sale of liquor in the state. Realizing that the increase in VAT alone was not enough to neutralize losses due to prohibition, the state government further burdened the common man on Tuesday as the state cabinet further increased taxes on petrol by 1.5% and diesel by 1% to generate additional revenue. With the increase in the taxes on the fuel the state is intending to generate additional revenue to the tune of Rs 270 crore in the current fiscal. The taxes on diesel which was at 18% has been hiked to 19% and taxes on petrol which was at 24.5% has been hiked to 26%. After increase in taxes on fuel, diesel prices has increased by 60 paise per litre and petrol by 80-85 paise per litre.

The government, however, maintained that the increase in taxes on fuel had nothing to do with prohibition and the such taxes were increased even when there was no prohibition in the state.

"The increase in prices of fuel is a routine and nothing to do with prohibition. Time to time such things are reviewed and when the government feels that there is need to increase it, it does", said Alok Mehta, Bihar Minister.

" There is not too much of increase in taxes. Our revenue has increased and the taxes on fuel is routine. People of the state should also participate to make prohibition a success", said JDU Spokesperson Neeraj Kumar.

OPPOSITION REACTION

The Opposition has attacked the government for over burdening the common man of the state twice within a week, first by increasing VAT on many items and now by increasing taxes on fuel.

Former Bihar CM Jitan Ram Manjhi said that incumbent CM Nitish Kumar was doing all the drama and troubling aam aadmi in the name of prohibition.

"In the recently concluded Assembly session, the government has increased VAT on many items. Prices of many things have increased now. Now, the government has increased taxes on fuel. The farmers in the state will be the worst hit. Nitish is doing drama in the name of prohibition to cover the losses due to prohibition", said Manjhi.

BJP's Sushil Modi too slammed the government maintaining that offsetting the losses to state treasury via taxing common man was not the correct thing. "This is not right that you tax people to offset the losses caused to the state government because of prohibition. In January the government raised surcharge on fuel and now tax", said Modi.

It may be noted that the Bihar government in January this year had imposed hefty tax on several items, including eatables such as sweets, samosas and kachouris.

The government then imposed 13.5% VAT on luxury items such as sweets costing more than Rs 500 per kg. Similar tax was also imposed on branded packaged items such as flour, refined flour, suji, besan, namkeen, salted peanuts, bhujiya, potato chips, chanachur, besides mosquito repellents and foam sheets.



