Kerala imposes new taxes to cover loss due to ban on bars, will it help: Explained

After the liquor ban in Kerala, the state Government steeply increased taxes on liquor, cigarettes, water charges and fees for various services to cover up the loss which will be incurred due to the ban.

It has been anticipated that the government's decision to close down 732 liquor bars will result in a revenue loss of Rs 1,800 crore to the state exchequer.

So now, be ready to pay a hefty mark-up to enjoy classy wine.

What has the government done to overcome crisis?

• The Cabinet hiked tax on Indian Made Foreign Liquor by 20 per cent.
• It has imposed a five per cent cess for rehabilitation of workers who lost their jobs due to closure of bars. This is said to pose a burden of net Rs 1,130 crore to the exchequer.
• The tax on wine and beer would rise from 50 per cent to 70 per cent, bringing an additional Rs 100 crore to the state kitty.
• The tax on cigarettes and tobacco products has been raised by eight per cent from the existing 22 per cent to mop Rs 264 crore.
• Five per cent of the revenue accruing through this would be utilised to fund the free cancer treatment programme.
• Land taxes, duties and fees for various kinds of property transactions would also go up with the lifting of the ceiling of Rs 1000 on them.
• Water charges would go up by 50 to 60 per cent, depending upon the slab of consumption.

What is Kerala's new liquor policy?

• As per the policy, only five-star hotels in Kerala can serve liquor.
• No renewal of licences for the 418 bars which remain closed now.
• From April 2015, the existing 318 bars will not get their licences renewed.
• Every year 10 per cent of beverages corporation outlets will be phased out so in the next 10 years, all of them will be shut down.
• Bars and Bevco outlets will remain shut on Sundays and every first day of the month.
• A rehab package for habitual drinkers and bar employees, Punarjani, to be set up.

Effects of the liquor policy

• The new liquor policy is aimed at shutting down bars attached to hotels below the five-star category.
• The policy is aimed at reducing availability of liquor in the State.
• It will lead to shut down of 732 bars across the State and will brand them as 'sub-standard".
• The ban order comes into force from September 11, 2014.