The Cabinet on Thursday cleared the draft bill for giving legislative backing to the government’s decision to waive the five per cent turnover tax imposed on distilleries in the State.
The Kerala General Sales Tax Act (Amendment) Bill 2022 seeks to rewrite the 1963 law of the same name to simultaneously hike liquor sales tax by four per cent and Kerala State Beverages Corporation’s (BEVCO) warehouse commission by one per cent to offset the revenue loss caused by the proposed rollback of the turnover tax on liquor manufactured in Kerala.
The move would marginally increase liquor prices in Kerala by one to two per cent. Leader of Opposition V. D. Satheesan has slammed the move. He said the government sought to advantage the powerful liquor lobby at the taxpayers’ expense by forsaking the turnover levy, which had existed since 1963.
Mr. Satheesan said the government had compelled taxpayers to pick up the tab for the generosity extended to the liquor lobby by insensitively increasing the maximum retail price of legal alcohol. The liquor price increase would further tax ordinary folk struggling to keep the household budget afloat.
The Kerala government already charges a prohibitive 247 per cent sales tax on liquor. From now on, the liquor tax will increase to 251 per cent for alcohol costing more than ₹400 (750 ml) and 241 per cent for liquor costing less than ₹400 (750 ml). An excise official said the hike would entail a ₹10 to ₹20 increase in the price of liquor retailed through State-run outlets.
The amendment Bill has its provenance in a request by distilleries in Kerala. They flagged a steep increase in the price of raw materials, chiefly molasses, imported from sugarcane-growing religions in North India. They pointed out that distilleries exporting liquor to Kerala from other regions did not face a turnover tax and demanded a level playing field. The distilleries demanded a five per cent increase in the procurement price of liquor. The government rejected the request but agreed to waive the turnover tax imposed on alcohol manufactured and bottled in Kerala.
