Kerala government refuses to roll back cess on fuel and liquor; Opposition stages protest

In his lengthy reply during a debate on the budget in the House, Balagopal justified the social security cess saying it was needed to ensure the uninterrupted distribution of monthly social security pension to 62 lakh beneficiaries in the state.

The money, collected as cess, would be going to a special seed fund for the purpose and it could only meet less than 10 percent of the total amount required for the monthly pension, he told the House.

“It is not a big tax burden to the people. It is required to provide pensions to 62 lakh people and to ensure the security of their families. Are you (the Opposition) saying that we should stop the pension scheme? ” asked Balagopal.

Also read: Budgetary allocation for Sabarimala rail connectivity

No hike in 2 years

He said the cess on liquor sales and its tax has not been hiked in the past two years.

Stating that the state could not go forward without revising the tax rates, he urged the Opposition to cooperate with the government measures for the overall well-being of the people.

He took a dig at the ongoing agitations by the UDF in and outside the House, and said the protest was based on news reports that the cess would be slashed by ₹1.

Accusing the BJP-led Central government of collecting tax by encroaching upon the state’s jurisdiction, he said Kerala’s economy was facing challenges due to the Centre’s action of reducing its borrowing capacity.

The minister alleged that the revenue of Kerala was heavily hit due to the flawed implementation of the GST by the Centre.

The GST, which came into effect on the grounds that the tax system would be expanded and tax revenue would increase, has created a loss of revenue for the states.

“Last year, the GST revenue was ₹24,000 crore. Our expected GST revenue for the current year is ₹30,000 crore. This ₹30,000 crore is only two-thirds of the revenue that the state should receive. At the old rate, the government’s revenue would have been around ₹45,000 crore. That means the government would have an additional income of ₹15,000 crore,” he said.

The also minister said during the tenure of the 10th Finance Commission, the share received by Kerala from the divisible pool was 3.87 percent.

It was gradually brought down to 1.925 percent by the time of the 15th Finance Commission.

That meant Kerala’s share was reduced to less than half, Balagopal said.

Also read: Kerala gets order cutting off-budget borrowing

Leaders demand rollback

Boycotting the Assembly proceedings, Leader of Opposition in the Assembly VD Satheesan said the Congress-UDF could not accept the adamant stand of the government that no tax proposals that burdened the common people would be withdrawn.

Earlier, some leaders of the ruling front demanded a rollback of the increased cess.

LDF convenor EP Jayarajan demanded a rollback — at least partially — saying that increased fuel prices would force industries to move away from the state.

MV Govindan, state secretary of the LDF’s major constituent, the CPI(M), met fellow party leader and Chief Minister Pinarayi Vijayan and demanded at least a 50-percent rollback of the cess to minimise people’s wrath against the government.

Other LDF constituents, including the CPI, urged the chief minister to engage in damage control immediately.

Across Kerala, there is also a populist opinion that the increased tax burden due to the proposed budget had nullified some of the positive impacts of the Union budget.

Many believe the Kerala government was forced to initiate extra revenue collection because of its populist schemes, extravaganzas, luxuries, and poor financial management.

(With inputs from PTI)