No rollback of cess, tax announced in Budget, says Balagopal

Mahila Congress members on Wednesday march to the Assembly pulling a car in protest against the fuel cess and other tax proposals in the State Budget. | Photo Credit: S. MAHINSHA

Finance Minister K.N. Balagopal made it clear on Wednesday that the tax proposals and the social security cess on fuel and liquor announced in the 2023-24 State Budget will remain. Although speculation was rife that some relaxation was in the works, Mr. Balagopal did not announce any.

In his reply to the general discussion on the Budget in the Assembly, Mr. Balagopal defended the proposals and denied that the tax hikes were unnecessarily steep. Angered by the Minister’s stand, the Opposition United Democratic Front stormed out of the House in protest, terming the proposals unfair and unreasonable.

The social security cess on petrol, diesel and liquor is intended to finance the social security seed fund and should be viewed as a way to keep the social security pensions, which benefit over 60 lakh people, going, Mr. Balagopal said.

The tax on liquor has not been hiked in the past two years. The social security cess on liquor is not excessive as bottles priced below ₹500 account for the majority of the sales and they are outside the cess bracket. Bottles costing above  ₹1,000 accounted for only 8% of the sales. The Budget had announced a per bottle cess of  ₹20 on  Indian-made foreign liquor (IMFL) costing ₹500 to ₹999 and ₹40 on bottles costing above  ₹1,000, he said.

Taxes in the motor vehicle segment were finalised after studying the rates in other States such as Tamil Nadu and Karnataka. Many of the taxes collected by panchayats have not been revised since the 1960s and 70s, he said.

Leader of the Opposition V. D. Satheesan demanded that the government scrap all the tax proposals and the social security cesses announced in the Budget. The ₹2 cess on petrol and diesel can scarcely be justified at a time when petroleum prices are at its peak.

The Opposition cannot cooperate with such proposals, Mr. Satheesan said accusing the government of failing to tap available tax sources efficiently.

Following Friday’s Budget presentation, there was much speculation over the weekend that the Left Democratic Front may go in for some relaxations. But on Monday, Mr. Balagopal defended the proposals after the UDF announced an indefinite stir by four of its MLAs.

Mr. Balagopal announced ₹10 crore for Operation Breakthrough for tackling flooding in Ernakulam and  ₹5 crore for flood control in the Aroor constituency. He also announced ₹5 crore for the clean-up of Ashtamudi Lake and ₹2 crore for the Pattaya Mission. The development of the Karamana-Kaliyikkavila road will be speeded up.