Kerala Cabinet on Wednesday approved proposals to increase tax on cigarettes and tobacco products and Indian made foreign liquor (IMFL) including wine and beer, to mop up nearly Rs. 1500 crore.
The Cabinet also decided to double plantation tax (for four hectares and above) and increase the land tax by 150 per cent and fees on most of government services by 15 per cent to 50 per cent to tide over its financial difficulties. Ceilings on stamp duty and registration fees will go.
Chief Minister Oommen Chandy told the media after the Cabinet meeting that the tax on foreign liquor sold through the State Beverages Corporation would go up from 115 per cent to 135 per cent. There would also be a cess of five per cent on the tax, as announced earlier, to be used for rehabilitation of liquor addicts.
The tax on beer and wine would be hiked from 50 to 70 per cent, fetching additional revenue of Rs. 100 crore. The additional revenue from increase in tax on foreign liquor would be about Rs. 1130 crore.
Tax on cigarettes and tobacco products would be enhanced from 22 per cent to 30 per cent. Of the increase of eight percentage points, three would be earmarked for cancer care.
The Chief Minister said that currently there was a ceiling of Rs. 1000 on stamp duty for registration of partition, gift, release and settlement deeds. Now, one per cent duty on value of property would apply to partition and release deeds and two per cent on gift and settlement deeds without any ceiling. The ceiling of Rs. 25000 on registration fee of one per cent is also withdrawn.
The revised plantation tax would apply to coconut, arecanut, rubber, coffee, tea, cardamom and pepper plantations. There would be no tax on plantations with area of up to two hectares. The tax on plantations of between two to four hectares would be Rs. 100 a hectare. The rates will double for higher slabs.
Mr. Chandy said that all fees exceeding Rs. 10 collected by government for various services would be revised excluding educational fees. The increase would be 50 per cent for fees currently ranging from Rs. 10 to Rs. 1000. The hike would be 25 per cent in the case of fees currently in the bracket of Rs. 1000 to Rs. 10000. For fees exceeding Rs. 10000, the increase would be 15 per cent.
The Chief Minister said that the measure was initially envisaged to fetch Rs. 369 crore. However, this would come down significantly because of Cabinet decision to exclude the education sector from the hike. The revision in land tax rates would bring in Rs. 78 crore. The additional revenue from revision of plantation tax, stamp duty and registration fees was to be correctly estimated as the Cabinet had made some changes to the original proposals.
