Following the tradition set by his predecessors of increasing liquor prices in a bid to add to the state revenue, Karnataka Chief Minister BS Yediyurappa on Thursday proposed to increase the additional excise duty (AED) by 6% on average.

“I propose to increase the existing rates of Additional Excise Duty on Indian Made Liquor by 6 per cent across all 18 slabs,” he told the Assembly, adding that this would help to achieve a revenue target of Rs.22,700 crore fixed for the financial year 2020-21. This proposed hike is aimed to give the state an increased revenue of Rs 1750 crore compared to the previous fiscal target.

According to the proposed change, the price for a carton (9 litre) of liquor costing up to Rs 449 (lowest slab) will be increased by Rs 9 and price of cartons costing Rs 15001 (highest slab) will be increased by Rs 192.

Similarly, the CM proposed to increase the rate of tax on petrol from 32% to 35% and diesel from 21% to 24%.

“By this measure, there will be an increase in the price of petrol by Rs.1.60 per litre and that of diesel by Rs.1.59 per litre. Even after this increase, the price in Karnataka will be comparable to other neighbouring states,” the CM said.

Incidentally, for the current Financial Year 19-20, at the end of February, Rs.19,701 crore has been collected out of a revenue target of Rs. 20,950 crore.

At the outset of his budget speech, Yediyurappa said as per revised union budget estimates, there is a reduction of Rs.8,887 crore to Karnataka as part of the state’s share in central taxes. Additionally, the CM said there will be a shortfall of Rs 3,000 crore in GST (Goods and Services Tax) compensations as a result of reduced collections.

Further, the CM said an overall reduction of the share of central taxes has been decided for the financial year 2020-21 with the 15th Finance Commission reducing the state’s share to 3.64% from 4.71%. And the hike in rates of both fuel and liquor will be to offset the loss from the reduction in central taxes.