THIRUVANANTHAPURAM: The spike in petrol prices and increased tax revenue from liquor sale are turning out to be a big relief to the cash-strapped Kerala government.The tax collection from the sale of liquor and petrol together, between November 2020 and January this year, saw an increase of Rs 916 crore, compared to the corresponding period of the previous year. Revenue from liquor sales crossed the Rs 1,000-crore mark in December 2020 and this January after the bars and beer parlours were reopened in December.
While the state collected Rs 1,100 crore in tax in December 2020, an increase of 38% compared to December 2019, it rose to Rs 1,107 crore in January this year, an increase of 75.44% over last January.“There has been a significant increase in liquor sales after the reopening of bars and beer parlours on December 22,” said an official in the Taxes Department. “The sales through Bevco outlets also rose,” he said.
While the government gets the scheduled tax revenue in full for liquor sales through Bevco outlets, the earnings from sales at bars and beer parlours are much lesser since they pay turnover tax on sales value at 10%.The spike in petrol prices has also helped the state government.After February 2020, tax collection from petrol sales showed a year-over-year (YOY) growth of 3% in November, and it rose to 7.4% in December and 12.9% in January this year.
Rise in liquor sale shows economy is almost back to normal: Expert
The spike in fuel prices has also helped the state government. After February 2020, tax collection from petrol sales showed a year-over-year (YOY) growth of 3% in November, and it rose to 7.4% in December and 12.9% in January this year. The year-over-year (YOY) growth in the three months combined was 7.9% (Rs 79 crore). Diesel sales, however, is yet to recover from the post-lockdown slump. In January 2021, the collection was Rs 10 crore less compared to last January. The state levies 30.08% Kerala General Sales Tax on petrol and 22.76% on diesel. An additional Rs 1 per litre is levied on both petrol and diesel as extra sales tax. This apart, 1% cess is levied on sales tax and AST amount.
The state last revised the fuel tax was in June 2018 when the previous UDF government effected a cut to give customers relief. The tax rate was reduced from 31.8% to 30.08% on petrol and from 24.52% to 22.76% on diesel. With this, the prices of petrol and diesel were brought down by Rs 1 per litre. Economist and former director of Gulati Institute of Finance and Taxation Prof D Narayana opined the increase in liquor sales shows that the economy is almost back to normal. “Unlike the Centre or many other states, the Kerala government increased its spending during the pandemic, especially for welfare measures like food kit or social security pension,” he said.