States’ fears over GST regime have come true: TN Finance Minister

GST discussions, decisions ought to be data-driven, says Palanivel Thiaga Rajan

Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Wednesday said the States’ fears of losing autonomy with the Goods and Services Tax regime have come true.

“One thing that is very clear to me is the fears of loss of autonomy have been fully realised. The States have now very little independence in any matters of taxation now,” he said, stressing on how many problems can be resolved to the satisfaction of the States and industry if the GST decisions are data-driven.

“Given it is the law of the land, our job now is to make it as robust, as dependable, as high utility as possible. Within the constraints of the GST, I see lot of upside in terms of systems improvement, data driven assessment and decision making, plugging of loopholes, improvement of uniform enforcement…” he told the South India GST Conclave organised virtually by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Also Read: GST curtailing financial autonomy of States: H.D. Kumaraswamy

Echoing his remarks, Kerala Finance Minister K.N. Balagopal recalled how he had moved a dissent note, as a Member of Rajya Sabha in a parliamentary panel, stating the GST is very much against the principles of federalism. “What we apprehended about the legislation [then] is practically happening,” he said, adding that the State governments were facing financial crisis because of the GST. From July 2022, they would also not be compensated by the Centre for the loss of revenue.

Blaming the Centre’s policy and attitude towards the States as the problem, he underscored the need for businesses and government to work together for a strong economy.

Karnataka Industries Minister Murgesh Nirani said while there are a few pressing issues still to be resolved, the GST has brought out a historical transformation to the tax structure. He thanked the Prime Minister, the Union Finance Minister and members of the GST Council for ushering in the major tax reform.

FICCI Telangana Chairman T. Muralidharan, setting the tone for the discussion, said the conclave was an attempt by FICCI to act as a bridge between the States and the Centre on the GST. He said the southern States were the biggest losers in the new tax-sharing formula. FICCI will be submitting a report based on the deliberations to the Centre.

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