Opposing the Centre’s latest plan to introduce a Constitution Amendment Bill on the Goods and Services Tax (GST) and evolving consensus on various aspects through the proposed GST Council, Chief Minister O. Panneerselvam on Friday urged Prime Minister Narendra Modi not to rush through the Bill.
In a letter to Mr. Modi, he pointed to the serious long-term implications for the fiscal autonomy and revenue of the States in the event of the legislation being rushed through. “The Centre must ensure that the States’ fears are allayed and true consensus is achieved before such a far-reaching reform is attempted,” he said.
Renewing the State’s opposition to the GST Council as a constitutional body, he said that bringing petroleum and petroleum products under the ambit of the GST would cause the States a huge loss of revenue.
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The draft Bill did not include provisions for the States to levy higher taxes on tobacco and tobacco products, similar to what the Centre had been permitted.
On the compensation mechanism, he expressed the doubt whether a “fair, hassle-free and workable” method could be devised and implemented, considering the State’s experience with the Centre’s compensation mechanism for the Value-Added Tax and the reduction of the Central Sales Tax.