CHENNAI: Contending that critical aspects of the goods and services tax like an agreement on the list of exempted goods, still remain unresolved, Tamil Nadu on Thursday suggested that all states implement the new tax from September next year after resolving all outstanding issues. Addressing the first meeting of the GST Council held in New Delhi under the chairmanship of finance minister Arun Jaitley, Tamil Nadu’s representative and school education minister ‘MaFoi’ K. Pandiarajan said the weightage of the state’s vote should be in proportion to the representation of that particular state in the Rajya Sabha.
The AIADMK had raised the issue when the GST Bill was put to vote in Rajya Sabha last month. The Centre has proposed to implement GST with effect from April 1, 2017, but many critical aspects of GST such as consensus on the list of exempted goods and services, GST laws, threshold limits, GST rates including the floor rates with bands, compensation mechanism and administrative arrangements, remain unresolved.
“As things stand at present it seems extremely difficult to meet the time lines indicated. As per the Constitutional Amendment Bill, States have the option to defer implementation till 16.9.2017. Hence we would strongly suggest that all the states may implement GST from a common date preferably 1 September, 2017 after resolving all outstanding issues,” Mr Pandiarajan said.
Noting that Tamil Nadu, being a manufacturing state, stands to lose huge revenue if GST is implemented, he said the revenue to be compensated should pertain to all taxes subsumed under GST. This would exclude petroleum and alcoholic liquor for human consumption. “The base year for calculation of GST compensation has been suggested as 2015-16. This is acceptable,” the minister, who is an HR expert, said.
Mr Pandiarajan said Tamil Nadu insists that the compensation for a particular year should be worked out based on the estimated loss projected by the state government up to December of the year and tentative compensation released as advance compensation within the financial year. He also said the state proposes that the compensation amount due to the State should include the compensation received for Central Sales Tax to arrive at the growth rate and the projected revenue.
Quoting Chief Minister J. Jayalalithaa, he said co-operative federalism may degenerate into empty rhetoric if the states are not given adequate powers and fiscal resources; and co-operative federalism should not become a catchword to impose uniform administrative practices across the country without due regard to the specificities of the socio-economic situation in each state.
