Kerala government blinks: Protests force it to put idea of lowering alcohol tax on hold

Satheesan said: “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 pointed out that the previous CPI(M) government had decided to allow the sale of low-alcohol beverages but could not complete the process as Assembly election schedules were announced. “Six months after the second CPI(M) 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.”

He also said the first Vijayan government in 2018 had fixed the sales tax for foreign-made foreign liquor (FMFL) at 78 per cent. When the tax on 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, countering the CPI(M)’s allegation that he had accepted money from a Karnataka-based liquor company in return for lowering the tax on low-alcohol beverages.

Under the budget proposal, tax on beverages with alcohol content between 0.5% and 10% by volume (v/v) has been reduced from 251% to 120%. For products with alcohol content above 10% and up to 20% v/v, the tax has been lowered to 175%. At present, all Indian-made foreign liquor (IMFL) products in Kerala attract a uniform sales tax of 251%, irrespective of alcohol content. Low-alcohol beverages are currently not sold in Kerala because of the high tax burden.