To cut liquor prices, Kerala plans tax relief

After opposition leader Ramesh Chennithala alleged a Rs100 crore scam in the decision to raise liquor prices in the state, excise minister TP Ramakrishnan indicated on Sunday the government might consider tax reliefs to bring down the prices.

He, however, denied there was any corruption in the decision to raise the prices of liquor varieties. The minister agreed Kerala had a higher liquor tax compared to other states.

He said the price rise was necessitated due to rise in prices of raw materials. Companies had asked for a price hike in view of the increase in the cost of extra neutral alcohol, the basic raw material used for the manufacture of liquor.

The demand had been made a year ago, but a decision was deferred in the view of the Covid-19 pandemic.

But the government recently decided to allow a 7% increase in liquor prices for distributors who had entered into contracts with Bevco, the government agency responsible for the production and wholesale distribution of Indian-made foreign liquor. Beer and wine were spared from the rate increase.

Chennithala had alleged discussions were held between the ruling party leaders and the distillery owners at AKG Bhavan, the state party headquarters, where a deal was struck for an increase in prices. He alleged the deal involved a kickback of Rs100 crore.

The new rates are expected to come into force on February 1.

Bevco has announced a 7% increase for companies that have entered into distribution contracts for the current year. The companies are supposed to continue to supply beer and wine at previous year’s rates.

With this year’s price increase, the LDF government has allowed a 14% rise in liquor price over the past 3 years to provide support price to the distillers, Ramesh alleged.