Liquor prices increase by ₹10 to ₹20 for a 750 ml bottle as govt. offsets turnover tax waiver for distilleries by increasing sales tax and Bevco commission

Opposition says price hike enriches the liquor lobby and impoverishes ordinary consumers

With Governor Arif Mohammed Khan signing the Kerala General Sales Tax Act (Amendment) Bill 2022 into law, liquor prices in the State have registered a marginal increase.

The government charges a prohibitive 247% sales tax on liquor. From now on, it will increase to 251% for liquor costing more than ₹400 (750 ml) and 241% 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 cost of beer and wine would increase nominally by 2%.

The law gives legislative approval for the government’s decision to waive the 5% turnover tax imposed on liquor produced in distilleries in the State. It also sanctions a simultaneous hike in liquor sales tax by 4% and the Kerala State Beverages Corporation’s (Bevco) warehouse commission by 1% to offset the revenue loss caused by the rollback of the turnover tax.

Distilleries in Kerala had flagged an increase in the price of raw materials, chiefly molasses. They requested the government to increase the cost of their products procured via Bevco. They argued that distilleries exporting liquor to Kerala from other regions did not face a turnover tax and demanded a level-playing field.

The government refused to increase the procurement price of liquor. But, it agreed to renounce the 5% turnover tax on liquor produced in Kerala.

Leader of the Opposition V.D. Satheesan slammed the price hike. 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 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.