After limiting financial powers of the State governments with GST, the Centre was trying to take away their revenue collection through registration and lesser devolution of funds to the States, said Kerala State Finance Minister K.N. Balagopal.
“If the attack on State ... by taking away their taxes ... continued, the reduced tax collection would adversely impact the education, health and transport,” he said.
Addressing a meeting organised by Communist Party of India (Marxist) here on Tuesday, Mr. Balagopal said that State can increase its taxes only with respect to fuel and liquor. "Otherwise, (post-GST) State Finance Ministers have been reduced to cashiers disbursing money," he said.
Under the 15th Finance Commission’s devolution formula, the Centre which spends lesser funds gets the lion’s share of the total GST collection. “State Governments that need to spend more than 60% of their taxes are getting only 37% of the GST,” he said.
Now, the Centre was planning to take away more financial powers of the States through Motor Vehicle registration and land registration by way of one nation, one registration. Every State will lose heavily on this account.
Mr. Balagopal charged that the Centre, which implemented GST by convincing the States that it would compensate the tax downfall, was going back on its promise. For July, no GST compensation will be given to States.
Besides, the Centre was not sharing a chunk of the tax collected in the name of surcharge and cess. "Surcharge and cess should be imposed during emergency times and its rate should be very less. But, that is not the case now," he added.
Over and above, the Centre now denies sharing of tax with States if they already have higher growth, infrastructure and also based on the population census of 2011. States that have registered a good growth and have reduced population growth will be affected.
When the income of the taxes were curtailed in many ways, the States want to borrow money for their development. "Even this is not allowed by fixing a ceiling of 3% loan on the gross domestic product. If States were not allowed to borrow, how will they support the people, the traders, the farmers and industries that had suffered a lot during COVID lockdown," he added.
Mr. Balagopal said that Kerala would continue to increase Government expenditure to support all quarters so that their growth is ensured.
All the States should campaign for equal treatment of States by the Centre in order to strengthen the country.
Party leaders A. Soundararaja, Su. Venkatesan, and M.N.S. Venkataraman were among those who spoke.
