Kerala sales tax revenues (Rs cr)

(Petroleum includes petrol, diesel, ATF, kerosene)

Sources:

Finance dept, KSBC

THIRUVANANTHAPURAM: A joke in Kerala paying tribute to the drinking competencies of the Malayali is that in most towns the only one who can stand without a wobble after 6 pm is the local Gandhi statue. Keeping to that tradition, Keralites have just completed a ‘fizzcal’ year in terms of contribution to the state exchequer from drinking.It would be unusual for any government anywhere in the world to have tax revenue from liquor as its key source of revenue, but glass-clinking Keralites have managed that, with sales taxes from liquor overtaking tax earnings from petroleum sales for the first time, in 2009-10.In other words, sales tax collections from petrol diesel , ATF and kerosene, which contributed Rs 2,903 crore in 2009-10 has been eclipsed by tax revenues from brandy whisky , wine, gin, rum and assorted other spirits, which contributed Rs 3,000.16 crore.For a perspective of the state’s overall sales tax revenues, taxes from liquor and petroleum now contribute roughly 55%. Another statistic can be more numbing than a quick double-large peg that many drinkers prefer when in a hurry: While the turnover of the Kerala State Beverages Corporation over a 22-year period from its inception in 1984 to 2005-06 was Rs 18,100 crore, the earnings in the last four years and four months was a whopping Rs 19,075 crore.According to KSBC managing director N Shanker Reddy, contribution to the exchequer in the first 22 years was Rs 13,722 crore, while in the last four years and four months, gross contribution to government coffers tallied Rs 14,922 crore.And all of that despite the influential Catholic church in the state constantly decrying the easy availability of liquor, and even an expression of dismay by president Pratibha Patil about the drinking pattern of Keralites when she visited the state last year.While the bustle at bars across the state means good revenues for the state government, there is widespread concern about where all this could lead. Says Jose Sebastian, associate professor of the Gulati Institute of Finance and Taxation here: “No government can take pride in large volumes of taxes collected from liquor sales. In fact, high tax rates are levied on liquor to discourage drinking. In Kerala, what is happening is that the significant tax collections made through the drinking habits of ordinary people is helping subsidize another segment.”There is also the issue of how liquor consumption is taking a toll on the health of Keralites. According to Dr Jacob Philip, a gastroenterologist at the Cosmopolitan Hospital here, “Over the past decade, there is a noticeable increase in the number of younger people having drinking-related diseases, though there has not been any alarming rise in the overall numbers who have alcohol-induced illnesses”. He says one cause for concern is that diabetes and obesity are quite prevalent in the state, and these are compounding factors along with alcohol consumption, leading to health complications.The increasing incidence of liver cirrhosis and related diseases has prompted the Noorul Islam Institute of Medical Sciences (NIMS) here to establish an exclusive facility to cater to the problem. NIMS Medicity managing director Faizal Khan is putting in place the NIMS Institute of Liver Studies and Research, designed by California-based healthcare consultancy and design outfit Freeman White, which will offer the broad range of hepatology studies and treatment options.Khan says recent statistics point to a potentially explosive situation in terms of alcohol-induced diseases. “Presently, heart diseases are the biggest killer in the state, but statistics point to liver cirrhosis emerging as a bigger threat”, says he.Professor KJ Joseph of the Centre for Development Studies says the liquor consumption pattern in Kerala is partly a reflection of the disposable incomes. “What is striking is that liquor prices have gone up and so have the prices of other essential commodities, and yet liquor consumption is climbing”, he says.Jose Sebastian feels it is wrong for the government to charge such high prices for liquor, and suggests a recipe to bring down consumption even after reducing liquor prices: “It has to be a two-pronged strategy – Reduce the easy availability of liquor, and make social interventions, like increasing awareness about the ill-effects of liquor and running de-addiction facilities.”“Many people are under the impression that liquor use can enhance bedroom performance of men. Studies actually show, and a leading Kerala poet has penned, how drunken men can in fact be inactive in bed”, says Sebastian.He feels a call for prohibition, as the Church is demanding, or painting alcohol consumption as a sin, is not the right approach. “Instead, there should be a feeling, for instance, among family members that they are not able to go for higher studies or enjoy a vacation because of the drinking habits of the bread winner”, says Sebastian.But neither the Church homilies nor the president’s horror seems to have any impact on the Malayali. With no major hurry in life, no great manufacturing rat race, plentiful annual inward remittances of about Rs 25,000 crore from around the world, and a good scenery outside the window, the average Malayali sees it as an ideal setting to raise another toast. The Gandhi statue can only stand stupefied.Year Petroleum Liquor2005-06 2,028 1,4222006-07 2,338 1,6942007-08 2,341 1,9762008-09 2,670 2,5092009-10 2,903 3,000