Southern states losing more in new tax-sharing formula: Ministers

In a first-ever attempt FICCI, brought together four Southern State Councils of it on board to organise a unique event– “South India GST Conclave – an Online Interaction with the Ministers of three Southern States”, Kerala, Karnataka and Tamil Nadu.

Murugesh R Nirani, Industry Minister, Govt. of Karnataka; . K. N. Balagopal,  Finance Minister, Govt. of Kerala;  P Thiagarajan,  Finance Minister, Govt. of Tamil Nadu participated in the conclave.  

Participating in the conclave,   K. N. Balagopal, Finance Minister, Govt. of Kerala appreciated the Southern State Councils of FICCI for organizing a conclave on such a need of the hour subject.  Kerala’s tax collection used to be 14 to 16% before the GST, but it has reached a stagnation which may be partly due to covid and partly due inherent structural defects of the system.  The revenue share of states was reduced from 16%  to 11.3%  added to the woes. It has become a very serious situation, he said.

Speaking further he added that the GST system is very much against the principles of the Federal System.  The state governments are facing financial problems because of GST.

P Thiagarajan, Finance Minister, Govt. of Tamil Nadu said the GST system is shaky.  He deplored States’ loss of Fiscal Autonomy in a Centralised Federal System.  States have very little independence in the matter of taxation. This is also confirmed by a survey.   States primarily depend on two sources for their revenue – their revenue and central transfers. Since its implementation, the GST regime has reduced the resource-generating capacity of States.  It is also leading to inter-State inequality. To tide over a few loose ends, he suggested that data must be used to make decisions.

Murugesh R Nirani,  Industry Minister, Govt. of Karnataka had given his overall satisfaction about it. He thanked Prime Minister Narendra Modi and others for major tax reforms.  GST, he said, enabled scientific assessment of Tax.  GST helped more tax compliance. The states have seen increased revenues.  However, there are few issues still to be resolved, he said. 

Earlier setting the tone for the discussion Muralidharan, FICCI Telangana Chairman explained why they felt the need for organizing such a conclave and what the context was.  This was the first-ever conclave on the subject concerning all the stakeholders.  That is why we brought all of them on the single platform.  FICCI always used to give a proactive presentation of industry point of view.  But, moving away from that, in this case,  we are n acting as a bridge for the first time he said.

The views and concerns expressed by participants will be compiled and a report shall be submitted to the Ministry of Finance, Govt. of India, Muralidharan informed..

Murali Krishna Reddy, Co-Chair welcomed the gathering. GSK Velu FICCI Tamil Nadu State Council Chairman; K Ullas Kamath, Karnataka State Council Chairman and Deepak L. Aswani Co-Chairman of FICCI Kerala State Council Kerala introduced their respective state Ministers. 

Dilip Chenoy, Secretary-General of FICCI proposed a vote of thanks.  This was a combined effort of all to make GST law simple and easy to implement, he concluded

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