BENGALURU: The Resource Mobilisation Committee (RMC), constituted by the state government to examine the state’s alcohol excise taxation structure, on Wednesday submitted its report to the finance department.
The report states that Karnataka’s current excise framework taxes alcohol based on price and product category rather than on alcohol content. About 11% of the state’s population consumes alcohol – below the national average.
“Yet Karnataka is one of the five southern states that together accounts for roughly 45% of all alcohol sold in the country. Fewer people drink, but those who do, drink more. This pattern of high-intensity consumption among a smaller base of drinkers is precisely the configuration that generates the most harm, because the relationship between alcohol intake and damage is not linear: the risk of accidents, violence, liver disease, and dependence rises steeply with the quantity consumed per occasion,” the RMC report states.
The Committee underscored the need for excise tax reform from volume- or brand-based to alcohol content in beverage and said, “Excise taxation is the most effective policy instrument available to Karnataka for reducing alcohol-related harm.
Prohibition over-corrects and generates illicit markets. Information campaigns cannot address self-control failures. Enforcement is necessary but insufficient as a primary instrument. Taxation works through the price mechanism, addressing both externalities and internalities without requiring individualised detection. It is administratively feasible, scalable, and – as the evidence on price elasticities confirms – effective at changing behaviour.
The tax must be based on alcohol content – not on price, brand, or product category. A person’s liver, brain, and reflexes respond to the quantity of alcohol consumed, not to the price paid for it,” the report said.
“A tax system that charges different rates based on price or category... creates perverse outcome: it under-taxes high-strength, low-price products (where harm per rupee is highest) and over-taxes premium products (where harm per rupee is lower). This is the opposite of what corrective taxation should do. It also creates an incentive for consumers to substitute toward cheaper, higher-strength products - precisely the pattern most associated with harmful drinking,” it said.
It has been placed on the official website of the finance department. karnataka.gov.in for wider consultation. “All interested stakeholders including industry participants, public health experts, academic institutions, civil society organizations, and citizens are invited to review the report and submit comments to spobud-fd@karnataka.gov.in on or before 5.30 pm, May 22, 2026,” the RMC said.