Thiruvananthapuram: The Kerala government has put its proposal to reduce sales tax on low-alcohol beverages on hold following protests from within the ruling United Democratic Front (UDF) and minority communities.
Chief Minister V D Satheesan on Wednesday told the Assembly that a decision on allowing the sale of low-alcohol beverages would be taken only after consultations among UDF allies.
Satheesan, who also holds the finance portfolio, had announced a new tax regime for low-alcohol beverages in the budget last week, triggering opposition from the Congress and its ally, the Indian Union Muslim League. Muslim clerics’ organisations and prominent Christian churches also opposed the move, expressing concerns that it could increase alcohol addiction in Kerala. The Opposition Communist Party of India (Marxist) alleged corruption behind the decision.
"The liquor policy will be decided by the UDF. We will hold discussions among the UDF allies and if the opinion is against selling low alcohol beverages in Kerala, we will not sell that category of liquor. What is announced in the budget is only a tax proposal. On the other hand, if the UDF takes a policy decision to allow low-alcohol content beverages, then the proposed tax will be in force," Satheesan said.
He also pointed out that the previous Communist Party of India (Marxist)-led government had decided to allow the sale of low-alcohol beverages but could not complete the process due to the announcement of Assembly election schedules.
"Six months after the second Pinarayi Vijayan government came into office, the excise department under then minister M V Govindan had initiated steps to define low-alcohol content beverages. In the liquor policy of 2022-23, the previous government had taken a decision to make such beverages available in Kerala," Satheesan said.
Responding to the Communist Party of India (Marxist)’s allegation that he had accepted money from a Karnataka-based liquor company in exchange for reducing taxes on low-alcohol beverages, Satheesan said the first Vijayan government in 2018 had fixed the sales tax for foreign-made foreign liquor (FMFL) at 78 per cent.
He said that when the tax on Indian-made foreign liquor (IMFL) was increased to 251 per cent in 2022-23, the rate for FMFL was only 115 per cent.
"Was the tax rate reduced after receiving money from Johnnie Walker and Chivas Regal?" Satheesan asked.
Under the budget proposal, the sales tax on beverages with alcohol content between 0.5 per cent and 10 per cent by volume (v/v) was reduced from 251 per cent to 120 per cent. For products with alcohol content above 10 per cent and up to 20 per cent v/v, the tax was proposed to be lowered to 175 per cent.
Currently, all Indian-made foreign liquor products in Kerala attract a uniform sales tax of 251 per cent, regardless of alcohol content. Low-alcohol beverages are not currently sold in Kerala due to the high tax burden.