Kerala government's budget taxes liquor, proposes sops for tourism

The Kerala government's budget for 2010-11 today proposed to extend the ambit of welfare schemes like employment guarantee and food subsidy, reduce taxes on tourism, beer and wine and impose fresh ones on direct to home services and jewellery shop owners.

While continuing with most of the schemes under the Rs10,000 crore stimulus package unveiled last year during the slowdown, State finance minister Thomas Isaac in his budget announced fresh sops for the crisis-hit tourism sector by slashing the luxury tax.
 
Luxury tax on tourism, a major revenue earner, was brought down to 7.5% and 12.5% in different categories from 10-15%. Among other highlights of the budget are the extension of the Rs2-per-kg-rice scheme to labourers of the unorganised sector from June and the employment guarantee scheme to the urban areas.

The government has earmarked Rs500 crore for the food subsidy plan that will benefit about 3.5 million families.

Possibly with an eye on the assembly polls next year, the budget also left VAT rates untouched but proposed a 10% hike in tax on liquor other than beer and wine.

The budget, showing a cumulative deficit of Rs577.09 crore, also sharply brought down the stamp duty on registration of real estate property as a sop to recession-hit construction sector.

Stating that Kerala cannot get rid of the revenue deficit by 2014-15 as suggested by the 13th Finance Commission, Issac said it would be Rs3629.55 crore for the year, about 11.64% of the state's revenue.

Total capital expenditure is pegged at Rs 4145.38 crore while the state plans to raise Rs874.14 crore, mainly by tapping non-tax sources. Tax on beer and wine was slashed by 10%, but that
on other liquors was increased by 10%.

The budget also sought to rationalise stamp duty and increased lifetime tax to 8% for new motor cars and omni buses for private use, where engine capacity is 1500 cc and above. A lifetime tax of six per cent ad valorem on all types of construction equipment vehicles was also imposed.

As the steep rise in gold prices had not been adequately reflected in the compounded tax, the budget refixed tax rates increase payable by the Jewellery shop owners. Direct to home service was brought under the tax net, with a levy of one per cent tax on gross charges paid by customers.

To protect small-scale Cable TV operators, it exempted those having less than 5000 connections from luxury tax.

The budget proposed to regularise conversion of paddy land into commercial land in revenue records prior to 2008 by levying a fee on the basis of newly fixed fair value of land. This will come into force from April next. Another proposal was to mobilise revenue from sand and silt mining from dams.