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State may peg healthcare funds on liquor

Sawant said he had communicated with Chief Minister Devendra Fadnavis and Finance Minister Sudhir Mungantiwar to examine if such a cess could be charged.

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Tipplers may soon fund the state's public sector health and insurance initiatives. The state health department has suggested the levy of a health cess to generate money for its schemes.

"Our programs, such as the Mahatma Phule Jan Arogya Yojana and Balasaheb Thackeray insurance schemes, need funds. The health department must raise this money itself... through a health cess," said health minister Dr Deepak Sawant, adding this would help them provide quality public healthcare services. Sawant said he had communicated with Chief Minister Devendra Fadnavis and Finance Minister Sudhir Mungantiwar to examine if such a cess could be charged.

Though Sawant was non-committal on the commodities on which this cess could be levied, officials said the proposal could cover liquor. "There are some ideas, however, with the advent of the Goods and Services Tax (GST) (where almost all indirect taxes have been subsumed into one tax), the scope for taxation for the state government is very limited except for motor spirits and alcohol," said a senior health department official.

An official said they had discussed the concept of a 'sin tax' to be levied on alcohol.

"This will reduce our dependence on the state budget for funding. It could be charged on foreign liquor and beer, while country liquor can be exempted to spare the working class, who are its clientele," he added.

Sources from the state finance and state excise departments noted that alcohol, which was a price-sensitive commodity, was already taxed heavily. After experimenting with prohibition, Maharashtra has levied a high rate of taxation on liquor to generate revenues and discourage consumption. However, this has led to liquor being smuggled into the state from neighboring areas such as Goa and Daman.

The new National Health Policy unveiled by the Centre earlier this year had rejected the proposal in the previous 2015 draft to introduce a "health cess" for funding public investments in health.

Globally, sin taxes are levied on goods which affect public health such as alcohol, high-calorie foods or products containing sugar to dissuade their consumption and generate additional resources. This includes countries such as Hungary, Mexico and some US states. In India, Kerala imposed a 14.5% 'fat tax' on fast foods like pizzas, sandwiches and burgers in 2016.

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