Even as the state is facing heavy financial loss due to the government’s policy of cutting down on liquor, the new tax hike imposed in various services is stirring up further objections.
The cabinet on Wednesday increased the taxes on liquor, tobacco products, water charges, land registration and stamp duty with the purpose of mopping up over Rs. 1500 crore for tacking the current financial crunch. The tax on Indian made foreign liquor would be increased by 20% and a 5 % cess for rehabilitation of workers who lost their jobs due to closure of bars would be imposed. Chief Minister Chandy has said that the tax hikes would not affect the ordinary man. But the hikes are estimated to cause a heavy burden of around Rs 2010 crore on the people. The 25 percent hike in taxes on liquor, 20 percent hike on beer and wine, and eight percent increase in tobacco products is expected to yield an additional revenue of Rs.1,494 crore. Water charges are also on a rise with a 50 % increase for more than 10 kilolitres of water usage every month hoping for additional revenue of Rs.205 crore. However, the water charges have not been raised for those below the poverty line. While the land registration and stamp duty charges have been hiked with the expectation of mobilizing an additional revenue of Rs 78 crore per year, the fees charged in the education sector would not be raised.
The state cabinet ministers would be taking a 20 % cut in salary till the end of this fiscal to take part in the move. The hike in taxes is seen as measures towards countering the financial loss incurred through the closing down of the bars in the state. The government has justified the hikes on liquor, cigarettes and tobacco as a means of ensuring the reduction of their consumption. The decision to close down 730 bars out of 752 except the ones attached with five star hotels, was the first step towards total liquor prohibition in the state. The closed bars provide the government with Rs 150 crore per month with the liquor business contributing 22 % of the state’s revenue.
The policy of achieving a “dry state” has therefore pushed the state into severe economic crisis. For the first time since the present government assumed office in 2011, the state has gone for an overdraft of Rs.100 crore early this month to overcome the financial crisis. The state has already borrowed Rs 6900 crore this financial year when the maximum ceiling on borrowing for this fiscal is Rs. 14, 000 crore. Objections have been raised from various sides including from senior and opposition leaders critisising the latest government move. The government, at present should be addressing the scores of existing issues instead of increasing the burden on the common man. The wrong decisions have fallen heavily on the people which shouldn’t be happening. The latest move therefore is anti democratic and should be dealt with strong demur.