Stating that the Union Budget 2015-16 has consciously eschewed a “big bang” approach, AIADMK general secretary Jayalalithaa has said it has fallen short of expectations as the hopes and expectations of Tamil Nadu have not been fully met.
In a statement, Ms. Jayalalithaa said while there has been considerable talk of “co-operative federalism”, the actual measures taken in the budget have belied this rhetoric. While the 14th Finance Commission has increased the shareable element out of the divisible pool from 32 to 42 per cent, the Centre has found numerous ways to claw back the increased devolution, she charged.
The central assistance to State and Union Territories plan is reduced from Rs. 3.38 lakh crore in 2014-15, to Rs. 2.04 lakh crore for 2015-16, which is an unprecedented cut of 39.64 per cent. “This is a huge reduction compared to the previous two financial years,” she pointed out.
“Unfortunately, many taxation actions of the Centre have meant that the drop in petroleum prices has not been fully passed on to consumers,” she criticised. The conversion of Rs.4 per litre out of the specific duty on petrol and diesel into road cess implies that the State governments are being deprived of shareable revenue, she added.
No incentives to encourage the States to join the GST regime, such as the promised CST compensation have been announced. “The lack of concrete measures for building confidence among the States to implement GST is disappointing,” she said.
In terms of taxation changes, she noted that indirect taxes have been raised, in particular Service Tax, while in Direct Taxes, significant benefits have been afforded to corporate entities. “This appears regressive,” she said.
“While the Corporate Tax rate is proposed to be reduced over four years to 25 per cent, there is no indication of any increase in the threshold for personal income tax, which is disappointing,” Ms. Jayalalithaa said.
Taxation 
