Thiruvananthapuram, Sep 17 (IANS): The Kerala government Wednesday hiked taxes on liquor and tobacco products, and water charges, land registration and stamp duty in a bid to tide over a financial crunch.

Also, the state cabinet ministers will take a 20 percent cut in salary till the end of this fiscal, said Chief Minister Oommen Chandy.

"Contrary to news reports, there is not going to be any freeze on recruitments to government jobs. We do have financial constraints and to deal with that we have increased the taxes and mind you, this is not going to affect the ordinary man," said Chandy to reporters after the weekly cabinet meeting here.

He said that on account of the 25 percent hike in taxes on liquor, 20 percent hike in beer and wine, and eight percent increase in tobacco products, there is going to be an additional revenue of Rs.1,494 crore.

"Liquor is not an essential commodity nor is it a fundamental right. Every time we get a request to increase the tax on tobacco products to 50 percent but we have not done that because in neighbouring states it has a tax of 22 percent. This time we have decided to increase to 30 percent," said Chandy.

For the first time since the present government assumed office in 2011, the state went into overdraft and borrowed Rs.100 crore early this month to tide over the financial crisis.

About the hike in water charges, Chandy said the Kerala Water Authority today incurs a loss of Rs.12 per kilo litre of water that is supplied to consumers.

"We have not hiked the charges for those in the below poverty line category and also for up to monthly use of 10 kilolitres in the above poverty line category consumers. For those who use above 10 kilolitres of water every month, there will be an increase of 50 percent in water charges. Through this increase we expect to get an additional revenue of Rs.205 crore," said Chandy.

He, however, added that there will be no increase in fees charged in the education sector but there will be an increase in land registration and stamp duty charges.

He said a high level committee has been formed to initiate steps to raise funds from financial markets.

State CPI-M secretary Pinarayi Vijayan told reporters that the tax hike is a blow on the people.

"We will not allow this to happen and we will organise protests by organising the people against this anti-people policy of the Chandy government," said Vijayan.