Bhatti At GST Meeting: GST Rationalisation Should Not Hit States' Revenues
Deputy Chief Minister and finance minister Mallu Bhatti Vikramarka has stressed the need to take concrete measures to ensure that states’ revenues do not decline in the process of the proposed GST rate rationalisation, restricting it to 5 and 12 per cent while removing the 18 and 28 per cent slabs.
Hyderabad: Deputy Chief Minister and finance minister Mallu Bhatti Vikramarka has stressed the need to take concrete measures to ensure that states’ revenues do not decline in the process of the proposed GST rate rationalisation, restricting it to 5 and 12 per cent while removing the 18 and 28 per cent slabs.
Speaking at a meeting of the group of ministers dealing with the subject in Delhi on Thursday, Bhatti recalled that at the time of introducing GST, the Centre had assured states of 14 per cent annual revenue growth. To bridge any shortfall, a compensation mechanism was implemented for the first five years, ensuring states achieved stable 14 per cent growth. He pointed out that states were witnessing only 8-9 per cent growth, far below the promised level.
While welcoming the idea of simplifying GST rates and reducing tax burden, the Deputy CM made it clear that steps must be taken to safeguard state revenues. Otherwise, welfare schemes for the poor and middle class, along with infrastructure projects being undertaken for the people, would suffer, he warned.
He observed that irrespective of whether one considered the ideal 14 per cent growth or the present 8-9 per cent, the new proposals, if viewed in isolation, might lead to negative revenue growth for states. He added that despite the fact that southern states like Telangana, Karnataka and Tamil Nadu make significant contributions to the national income, the distribution of central funds has not been in proportion to their share.
Supporting the principle of rate rationalisation, Bhatti insisted on a proper compensation mechanism. He suggested that either the current compensation cess be continued with the collections passed on to the states, or, if the cess is withdrawn, GST on cigarettes, liquor and other luxury or “sin” goods be increased, with the additional revenue allocated to the states.
Such an approach, he said, would reduce the burden on ordinary taxpayers while enabling state governments to continue welfare schemes for weaker sections and push forward infrastructure development effectively.