Representative imageThiruvananthapuram: The Kerala government, which was worried of losing Rs 1,700-crore revenue after the closure of liquor outlets and beer wine parlors near highways, will now get an additional income of Rs 2,000 crore from alcohol sales annually. This will be the largest single source of direct tax revenue for the government. The present direct tax income of the government is Rs 40,000 crore.
Fuel taxes bring Rs 8,000 crore annually, while liquor fetches over Rs 7,500 crore. As bars are opened in large numbers, the liquor tax income will gallop to Rs 10,000 crore. Another advantage is that more money can be drawn as advance from Beverages Corporation when government coffers go empty.
The excise department expects some 150 bars in three-star and four-star to open in July. Efforts are being made to reopen most of the 732 bars that were closed down by the UDF government, but the SC order that banned outlets within 500 meters of highways is the main hindrance. Many bars, which were set up in prime locations, find themselves in a fix due to the court order. They were also disappointed by the new state government clarification that Kannur-Kuttipuram and Cherthala-Kazhakoottam routes are indeed highways.
Bar owners have approached the government with the plea that star hotels may be allowed to continue where they are bars be allowed to function elsewhere in the taluk observing the SC rule. Government is considering this option as it is not possible to shift high-budget hotels. A final decision will be made only after considering legal aspects. Some five-star hotels and clubs which are unable to run bars are also raising this plea.
Double benefit
The government now gets a double benefit from some of the tax reforms introduced to compensate for the loss of revenue to some extent when bars had to be closed. The government had raised foreign liquor tax by 20 percent, introduced a rehab cess of 5 percent, increased tax on wine from 50 to 70 percent and of tobacco by 8 percent, besides an 8 percent hike in water taxes.
Those taxes were aimed at fetching some Rs 500 crore. Since they are still in place, it is estimated that the government will in effect gain Rs 2,500 crore to 3,000 crore.
