Thomas Isaac Slams UDF's Liquor Tax Cut as "Massive Corruption," Targets UDF Budget

Thiruvananthapuram: Former Finance Minister Dr T M Thomas Isaac has alleged that the changes made to the tax structure on low-strength liquor amount to large-scale corruption and an injustice to farmers. He said the current budget decision to cut the tax has triggered massive public protest, leaving the government in such uncertainty that it doesn't even know whether the tax concession will be included in the Finance Bill. No state budget, he said, has ever faced such a predicament.

He said that instead of creating opportunities for Keralam's farmers to earn additional income by making beverages from their own fruit produce, V D Satheesan, in his very first budget, fixed a tax rate for low-strength foreign liquor other than beer and wine — a move that, he said, harms farmers. He alleged there is major corruption behind handing over the Keralam market to large private companies such as Bacardi, and demanded that the Chief Minister take a clear stand on the issue when the Finance Bill comes up.

Thomas Isaac said Satheesan, who asked in the Assembly "what did I get out of it?", was speaking by concealing past facts. He said Satheesan's claim that the 2019 budget's tax cut on foreign liquor was a major scam is entirely wrong. He explained that until 2018-19, foreign-made liquor was directly imported into Keralam and sold, including in star hotels, by a private monopoly system. That year's budget ended this monopoly and restricted distribution rights for imported liquor exclusively to the Beverages Corporation (Bevco), thereby protecting the public sector. At the time, with a 150 percent customs duty combined with a 250 percent sales tax, prices had become so high that sales in the market had become virtually impossible. Because the customs duty remained in place, the state sales tax was reduced from 210 percent to 78 percent — still higher than the standard sales tax rate. In addition, to prevent these liquors from being sold cheaper than Indian-made liquor, a base price of Rs 6,000 was fixed for a 9-litre case, with an additional Rs 87.70 per proof litre — a move that brought in an extra Rs 80 crore to the treasury. The LDF leader questioned why Satheesan, who raised no objections in the Assembly back then, was now showing such anxiety over the issue.

He clarified that the Left is not opposed to private capital, but is firmly opposed to "privatisation" that undermines the public sector. He noted that Keralam's improvement in ease-of-doing-business rankings over the past decade — moving from 22nd to first nationally — was aimed precisely at attracting private capital. Even as the Narendra Modi government at the Centre hands over the country's entire mineral sector to private monopolies, he said, the LDF will not allow unregulated mining along Keralam's coastal areas, home to lakhs of people. This was why the LDF's budget had planned to develop the mining sector through a master plan jointly prepared by three public sector undertakings — KMML, Keltron, and the Non-Ferrous Materials Technology Centre in Hyderabad.

He said the UDF government's approach of providing land and construction funds for the new Haripad Medical College while handing over its management to a charitable society amounts to real privatisation, and warned that such moves would not be tolerated in Keralam. He said Satheesan's new budget has no clear means of raising revenue, and that having ruled out borrowing, the government's real plan now appears to be selling off public sector undertakings for cash — but the reception to this budget, he said, makes clear that such a move will not be allowed to succeed in Keralam. Thomas Isaac added that Chief Minister Satheesan is now being forced to walk back several claims made in the budget.