Chief Minister Siddaramaiah, who also holds finance portfolio, has demanded that the rationalisation of GST rates must be supported by a robust revenue protection framework for states for at least five years.
On Friday, representatives of eight non-BJP ruled states met in New Delhi to chalk out a consensus draft ahead of the Centre’s announcement regarding rationalisation of GST rates. The draft seeks to ensure reforms that are both fair and sustainable.
The draft, which will be placed before the GST Council, urged for a supplementary levy on sin and luxury goods besides a guaranteed compensation mechanism for the states at least for five years.
After attending the meeting in New Delhi, Revenue Minister Krishna Byregowda said the state is for rationalisation of GST rates, ease compliance and reducing the burden on the people. He said: “But such reforms must be accompanied by a robust framework that protects the fiscal interests of the states. Without this, states will find it difficult to sustain welfare and development programmes, and a serious weakening of their financial autonomy.”
He recalled that the opposition leaders had consistently objected to the faulty implementation of GST in 2017 and have always demanded rationalisation of rates. Even within the GST Council, states have repeatedly pressed for rationalisation, always with the caveat that the revenue interests of states must be safeguarded, he said.
The minister added that Karnataka too has raised this issue in multiple Council meetings.
“GST is a joint responsibility. It is founded on equal responsibility and respect for states and Centre. For the sake of endurance and stability of GST, the Centre and states must work together. This requires states to be taken into confidence and their concerns addressed adequately. We expect the central government to respond constructively and positively, engage with states in good faith in the true spirit of cooperative federalism”, he said.
“Karnataka has already been subjected to discrimination in the devolution of funds from the Union Government, suffering an annual shortfall of nearly Rs 25,000 crore. Any further erosion of GST revenues will only compound this injustice and directly affect our capacity to deliver on the promises of development and welfare”, he warned.
