M B Rajesh Questions Satheesan's Liquor Tax Relief, Keralam to Suffer Revenue Loss Exceeding ₹600 Crore

Thiruvananthapuram: Former Excise Minister and CPI(M) state committee member M B Rajesh has strongly criticised the decision to grant tax relief on low-strength liquor, saying the move — branded as concerning "low-strength alcohol" — paves the way for flooding the state with liquor and amounts to a grave injustice against society as well as a platform for large-scale corruption.

During the LDF government's tenure, permission had been granted for producing low-strength liquor using vegetables and fruits, a move that also benefited farmers significantly. Through a rule amendment, a category called "fortified wine" was introduced, but the LDF government did not reduce the existing tax applicable to wine, since that liquor was made using fruits and vegetables.

However, what the UDF government is now offering under the label "low-strength liquor" is alcohol manufactured using spirit. For liquor made using up to 10 percent spirit, the tax has been slashed by 120 percentage points. Currently, Indian Made Foreign Liquor attracts a tax rate of 251 percent, and it is from this rate that the 120-percentage-point cut has been made. This tax reduction, Rajesh said, was also a demand raised by a particular corporate company.

The same company had approached the LDF government with an identical demand, but the government at the time refused to concede. The then Finance Minister had cited two reasons for the refusal — that it would make liquor freely available, and that it would cause heavy financial loss to the government. However, soon after coming to power, the UDF government reduced the tax from 251 percent to 120 percent for liquor with up to 10 percent strength, and to 175 percent for liquor with up to 20 percent strength.

Rajesh pointed out that the Finance Minister, who continually cites a severe financial crisis, has through this tax concession caused a loss of at least Rs 600 crore to the exchequer. He said the decision also helps the company in question secure a much larger market. Chief Minister V D Satheesan, he said, owes Keralam's people an explanation for the interest behind granting a tax concession that floods the state with liquor at the government's own expense while causing it heavy revenue loss. "Let Satheesan just tell us how much was received," Rajesh said.

Another danger in this, he noted, is that what is being introduced into the market is ready-to-drink liquor — meaning it can be consumed straight from the bottle, much like a soft drink. This will make it freely available and is likely to result in widespread use among the younger generation, including children, with students potentially carrying it in their pockets to college.

Rajesh further alleged that those who once delivered passionate speeches against liquor are now the ones making it freely available, adding that this is precisely what is meant by "flooding the state with liquor." He demanded that, having caused such a massive revenue loss to Keralam, the government clarify what exactly was the quid pro quo behind the decision.