Feb 08: The government of Kerala, known fondly as the God’s country is going to increase the tax on alcohol as it gears up to levy 210 % tax on Indian-made foreign liquor meanwhile taxes on beer have been increased from 70 to 100% and according to Indian Express, the state currently receives an annual revenue of Rs 12,000 crore from liquor sales, and depends heavily on taxation
In the Budget speech of 2018-2019 as announced by the Finance Minister Thomas Isaac in the Assembly last week, the prices of liquor would go up in Kerala. The tax on liquor priced up to Rs 400 would be 200 percent, and the tax on liquor worth above Rs. 400 would be 210 percent, said the finance minister. Meanwhile, the tax on beer has been increased from 70 percent to 100 percent.
The tax rate on foreign-made liquor has been revamped at 78 percent. Fortunately, the government has segregated wine implicitly as a healthy alternative and it gets the least of the blunt with a revamp at 25 percent only for the imported wines.
The new base price of foreign-made foreign liquor would be Rs. 6,000 per case (Rs. 500 a bottle) without import duty and that of foreign-made foreign wine (imported wine) would be Rs. 3,000 per case, i.e. Rs. 250 a bottle.
Taxes on wine and liquor are the prerogative of the State government and have been kept out of the GST bill passed last year-along with petroleum and electricity charges. Article 47 of the Indian Constitution deals with ‘the improvement of public health as among its primary duties and it says that in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health’.
State of Kerala has its cake and has been eating it too. There have been attempts to introduce prohibition in the state a couple of years ago and, as of now, only hotels rated 3 stars and above can open bars. At the first instance, only 5-star hotels were allowed to open bars until the court indulgence which allows this concession to 4 and 3 stars as well. With the proposed increase in taxes, the liquor industry has been once again made the scapegoat to finance the running of the State.
However, the budget speech also brought a cheer for the liquor industry. Kerala State Beverages Corporation (BEVCO) has now been granted permission to sell foreign liquor too. This is being done ostensibly to discourage illegal trade and loss of revenue to the exchequer..
The rise in liquor prices is not going to be good news at all for a large number of liquor consumers in the State which inked record sales during the Christmas season last year. Liquor sales during Christmas season in Kerala clocked a new record, netting over Rs 195.29 crore. This was an increase of nearly Rs 38 crore over the previous year. According to a report, four days ahead of the festival, Kerala bought over Rs 160 crore worth of liquor from over 330 retail outlets of the state-run corporation. BEVCO, the sole vendor of Indian Made Foreign Liquor in both the wholesale and retail markets, recorded sales revenue of Rs 195.29 crore through its 330 outlets from December 21 to 24.
The basic price of FMFL will be mow fixed at INR 6,000 per case and for Foreign Made Wine at fixed price of INR 3,000 per case, so that the sale of FMFL does not affect the market of IMFL. Further, a special fee of INR 87.70 per proof litre will be levied according to the Abkari Act, on FMFL. A special fee of INR 1.25 per bulk litre will be levied on Foreign Made Wine, the Finance Minister said in his budget speech.
However, the decision if implemented is not expected to impact the current rates, as the Budget proposed to do away with many cess being levied on IMFL in the state.
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