Kerala Government Looks To Raise Additional Revenue, Increases Taxes On Liquor, Hikes Bus Fare

Kerala Government Looks To Raise Additional Revenue, Increases Taxes On Liquor, Hikes Bus FarePinarayi Vijayan, Chief Minister of Kerala. (Photo by Anushree Fadnavis/Hindustan Times via Getty Images)

The Kerala Government has set out to earn more revenue to tide over its financial problems to some extent by raising liquor prices and bus fares.

On Wednesday (13 May), the Left Democratic Front (LDF) led by the Communist Party of India-Marxist (CPM) said that the Cabinet had decided to bring in an Ordinance to hike the prices. Liquor prices could be raised by 10-25 per cent.

Media reports said taxes on wine and beer will be increased by 10 per cent. An additional cess of 10 per cent will be levied on liquor bottles below 600ml. All other forms of alcohol will incur a 35 per cent tax.

Kerala will likely resume sale of liquor, suspended since the nation-wide lockdown was announced on 24 March, on 18 May.

According to the State Finance Minister Thomas Isaac, Kerala will earn an additional revenue of Rs 2,000 crore from the tax hike.

The State will also allow retail sales of liquor through bars instead of the practice till now to allow sales only through government-owned Beverages Corporation and Supplyco.

Kerala earns Rs 2,500 crore annually as taxes through the sale of liquor. Sales during 2018-19 fiscal were reported at Rs 14,500 crore.

The LDF government headed by Pinarayi Vijayan has decided to double the bus fares to make up for losses incurred by bus owners while operating services maintaining the physical distancing norms.

The hike, second since February this year, would be discontinued once the novel Coronavirus situation clears up.

The State Government has stipulated that buses can carry only 50 per cent of their seating capacity with only one person sitting in a seat meant for two. In seats where three persons can sit, only two will be accommodated. No standees will be allowed.

No decision, however, has been taken on when public transport services will resume.

Both these decisions will help Kerala mop up additional revenue at a time when its public debt has increased to Rs 2.5 lakh crore.

Efforts of the Vijayan Government to raise tax collections have not yielded the desired results as they have gone up by only 12 per cent against a target of 30 per cent.

The State’s fiscal deficit in the 2019-20 financial year was estimated at Rs 26,291 crore.

Kerala's income has also been affected by the nation-wide lockdown announced to tackle the spread of Coronavirus. The State has so far reported 534 Covid-19 cases with four deaths. At least 490 of the positive cases have recovered.

M.R. Subramani is Executive Editor, Swarajya. He tweets @mrsubramani

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