The BJP-ruled Madhya Pradesh on Wednesday asserted that the states will not allow the Centre to impose any tax which hampers their autonomy, a development that may further delay implementation of the Goods and Services Tax.
“We would not allow the Centre to impose sales tax. That’s our domain and would impact our autonomy,” Madhya Pradesh Finance Minister Raghavji, whose GST model was rejected by the Centre, said.
He further said that if the Centre has any objections to the model suggested by him, he is open to remove those particular areas. “If the Centre has any objections to our model, they should tell us and we would remove it. We are open to it.”
The indirect tax regime, GST, is expected to replace excise duty, service tax on the Centre’s end and VAT on the states front, besides local levies, cesses and surcharges.
Apprehending encroachment on the fiscal autonomy of states by the Centre’s proposal on the Constitution amendment bill, Mr Raghavji proposed that the states be allowed to impose service tax without the amendment. State GST panel head Asim Dasgupta and Gujarat finance minister Saurabhbhai Patel had also come out with alternative model on GST.
However, the Centre refused to accept the alternative model of Goods and Services Tax, saying it does not allow the essential features of GST to operate.
The Centre has so far floated two drafts on Constitution Amendment bill. The first one was rejected by states as it proposed a GST Council, which they alleged gives veto power to Union Finance Minister on taxation issue of states. The draft had proposed that changes in GST could be brought about by two-thirds majority in the council.
To assuage states, the Centre came out with another draft, which says that changes in GST could only be made when there is complete consensus in the GST council. This draft is also opposed by the BJP-ruled states, besides Uttar Pradesh and Tamil Nadu.
Finance Minister Pranab Mukherjee had suggested that the Centre would come out with another draft.
The roll-out of GST has already missed a deadline of April 1, 2010, and the next slated date of the start of next fiscal may also not be met. The empowered committee of state finance ministers is likely to meet on October 27 in Goa to discuss GST.