Thiruvananthapuram: The hangover of Kerala’s decision to say no to liquor has begun showing, with the state government announcing a slew of tax hikes in an attempt to make up for the billions of rupees that will be foregone from liquor sales.

Finance Minister K.M. Mani has indicated more measures are on the way.

After the state cabinet’s decision on fresh tax measures across different sectors on Wednesday, finance minister K.M. Mani said on Thursday that “more scientific measures for expenditure control are under consideration of the government”. The finance minister added, “Expenditure cannot be controlled by the efforts my department alone; all departments have to pull together to cut spending”.

The decision for steep hikes in taxes across the spectrum follow the ruling United Democratic Front government’s decision to impose a phased prohibition in the state by shutting down all liquor bars immediately and ending retail sales of liquor through the Kerala State Beverages Corporation outlets over a ten-year period.

The state earns over Rs70 billion (Dh4.2 billion) annually from liquor sales.

Pointing out the reasons for the financial situation, Mani said 28,500 vacancies were created by this government, eight new medical colleges were initiated, 36 new talks were approved and for some projects like the Kochi Metro. Therefore, he said, more money had to be allocated than what was originally planned.

Mani’s Kerala Congress (M) party was among those who backed the move for phased prohibition, an idea piloted by Kerala Pradesh Congress Committee president, V.M. Sudheeran and backed by the Catholic Church. The Indian Union Muslim League also supported the move.

On Wednesday, the government had decided to increase tax on cigarettes and tobacco products and various liquor products including wines and beer. These measures are expected to earn Rs15 billion (Dh0.9 billion) for the government.

The tax axe also fell on the plantation sector, with the cabinet deciding to double plantation tax for holdings of four hectares and above, and increase land tax by 150 per cent. Fees for most government services will go up by 15-50 per cent and ceilings on stamp duty and registration fees will be removed.

The revised plantation tax will be particularly severe for rubber and cardamom planters who are already reeling under a price decline of their respective commodities.