Kerala's revenue model predominantly depends on taxing the poor evident from the fact that the government earned the largest revenue of Rs 5391 crores (USD 873 million) by selling liquor in the last fiscal year. Then comes the revenue from the sale of petrol and diesel which stood at Rs 4527 crores (USD 736 million) followed by real estate transactions at Rs 3621 crores (USD 589 million) generated from stamps and registration fees. The fourth largest revenue grosser was lotteries accounting for Rs 2750 crores (USD 447 million).
Consumers of alcohol, a bulk of them from the poor strata immensely contributes to the liquor sales closely followed by contribution from fish vendors and daily wage earners who are major buyers of petrol for their two-wheelers. Then comes the wannabe rich but perennially poor who keep hopefully setting aside a certain amount every other day to buy lottery tickets. As you can see the 1st, 2nd and 4th highest revenue generation for government is from the poor.
Imposing a luxury tax may be a step forward in an effort to progressively tax the rich. But will that be enough? The government needs to do much more for Kerala to move away from holding the notorious tag of being a so called money order economy. Non-resident Keralites pumped in nearly Rs 75000 crore (USD 13 billion) this year thanks to the falling rupee. The flow of NRK money is predicted to be nearly 40% of Kerala's GDP this fiscal year if the trend continues. Some cite that Kerala needs to start cracking on ways to differentiate the super-rich and the rich from the poor as far as land ownership goes. Can the revenue stream generated from land transaction be brought ahead of the other 3 (i.e liquor, oil and lottery) mentioned earlier effectively taxing the rich more than the poor? It could well be a herculean task for the government. At the end of the day we do need a socialist welfare economy. Don't we?
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