The Kerala Government has ruled out any rethink about tax proposals or the social security cess on fuel and liquor announced by Finance Minister KN Balagopal in the 2023-24 budget presented in the State Assembly on Friday last, dashing any hopes for relaxations as widely speculated. The budget had announced a ₹2 cess on every litre of petrol and diesel sold from April 1. 

The Finance Minister himself made known the Government’s resolve on this score in his reply to the general discussion on the budget in the Assembly on Wednesday. While strongly defending the budget proposals, Balagopal sought to counter the Opposition argument that they are ‘unconscionably steep.’ 

Also read:Kerala Finance Minister proposes to raise ₹2,955 cr in deficit budget

Funding welfare pensions 

Instead, they would only go to finance the social security seed fund, which would in turn keep the social security pensions running in the State benefiting an estimated 60 lakh-plus people, the Finance Minister said. Tax on liquor had not been revised in the past two years. The social security cess on liquor was not excessive either, as bottles priced below ₹500 account for the majority of the sales and they are outside its purview. 

The budget had announced a per-bottle cess of ₹20 on Indian-made foreign liquor (IMFL) costing ₹500 to ₹999 and ₹40 on bottles costing above ₹1,000. A bottle costing above ₹1,000 accounted for only eight per cent of the sales. Taxes in the motor vehicle segment were finalised after studying the rates in Tamil Nadu and Karnataka, the Finance Minister said.

Also read:Trade, industry bodies hail Kerala budget 

Property tax hike

Referring to the hike in property tax across the table, Balagopal said many of the taxes collected by panchayats were not revised since the 1960s and 70s and were due for a revision. But Leader of Opposition VD Satheesan of the Congress demanded that the tax and cess proposals be scrapped forthwith. The revision is ill-timed and he wanted the Government to instead tone up the collection mechanism.