Kerala's Alcohol Tax Revision Sparks Political Storm Over Low-Alcohol Liquor Policy

The Kerala government's decision to revise the sales tax on low-alcohol beverages has ignited a political controversy, with the opposition Left Democratic Front (LDF), some allies of the ruling United Democratic Front (UDF), and church bodies criticising the move. Allegations of corruption have also surfaced due to the speed at which the tax structure was implemented.

The Revised Budget for 2026–27, presented by the UDF government, reduced sales tax on Indian-made foreign liquor (IMFL) with low alcohol content. Beverages with 0.5% to 10% alcohol by volume will now attract a 120% tax, while those with 10% to 20% alcohol will be taxed at 175%. Previously, liquor with 42% alcohol was taxed at 251%.

Opposition leaders, including former Excise Minister M.B. Rajesh and former Finance Minister K.N. Balagopal, allege the move is corrupt and benefits specific interests. They claim the tax cut could cost the exchequer ₹600 crore annually and question whether the government received payment from a company that had previously sought similar concessions. The LDF government had earlier explored but shelved low-alcohol liquor production.

The proposal has also drawn internal criticism within the UDF. Veteran Congress leader V.M. Sudheeran urged Chief Minister V.D. Satheesan to reverse the decision, arguing it violates the UDF election manifesto's promise to combat alcohol abuse. AICC general secretary K.C. Venugopal indicated the party high command's displeasure.

The state government defends the move, stating it follows the previous government's legalisation of low-alcohol liquor production under the Kerala Small Scale Winery Rules, 2022. These rules allow wineries to produce horti-wine (up to 15.5% alcohol) from local fruits like jackfruit, mango, and banana, aiming to support farmers. However, the previous government did not fix a tax structure for such beverages.

The controversy highlights tensions between economic support for agriculture and public health concerns, as well as political accusations of favouritism. The government maintains the policy is consistent with promoting low-alcohol options and aiding farmers, while critics warn of increased alcohol accessibility and fiscal loss.