Losses from bars: Kerala jacks up taxes on liquor, cigarettes

Thiruvananthapuram: Faced with a grim fund crunch arising from its policy of sharply cutting down on the liquor business, Kerala government today steeply increased taxes on liquor, cigarettes, water charges and fees for various services to mop up over Rs 1,500 crore.

In a major post-budget exercise of Additional Resources Mobilisation of recent times, the Cabinet hiked tax on Indian Made Foreign Liquor by 20 per cent and imposed a five per cent cess for rehabilitation of workers who lost their jobs due to closure of bars. The measure is anticipated to net Rs 1,130 crore to the exchequer.

The tax on wine and beer would go from 50 per cent to 70 per cent, bringing an additional Rs 100 crore to the state kitty. The tax on cigarettes and tobacco products has been raised by eight per cent from the existing 22 per cent to mop Rs 264 crore. Five per cent of the revenue accruing through this would be utilised to fund the free cancer treatment programme.

Briefing reporters on Cabinet decisions, Chief Minister Oommen Chandy justified the move to go in for major hike in taxes and service charges outside the budget, holding that there had been several such instances in the past.

He dismissed suggestions that the Congress-led UDF government's decision to close down bars had pushed the state into a 'serious financial crisis" but admitted the state had been passing through a phase of "financial difficulty", warranting some measures. Land taxes, duties and fees for various kinds of property transactions would also go up with the lifting of the ceiling of Rs 1000 on them, which would boost revenue by Rs 78 crore.

The fee for availing services from government would also be increased with the education sector being exempted from this. This measure is expected to bring in about Rs 300 crore. Water charges would go up by 50 to 60 per cent, depending upon the slab of consumption. The proposal would bring in Rs 205 crore to Kerala Water Authority, which has been incurring a heavy loss due to revenue gap.

The government's decision to close down 732 liquor bars and phase out retail outlets is anticipated to result in a revenue loss of Rs 1,800 crore to the exchequer.