Naidu Wants 50 p.c. Share in Central Tax for States

AP chief minister comes down heavily on the Central government for encroaching on State subjects through a series of centrally-sponsored schemes.

Published: 13th September 2014 06:10 AM  |   Last Updated: 13th September 2014 07:35 AM   |  A+A-

Project ion

TIRUPATI: Coming down heavily on the Central government for encroaching into State subjects, AP Chief Minister N Chandrababu Naidu urged the members of the 14th Finance Commission (FC) for a higher share in devolution of taxes from the current 32 per cent to 50 per cent.

Such a high percentage will allow states to retain more net tax revenues with themselves. Of the 32 per cent earmarked for all states together, each state will be entitled to get a percentage based on criteria such as equity, population, area and fiscal discipline.

Project ion.JPGA state with higher population will have a lower per capita, and as a result will be entitled to more funds. According to Naidu, the Commission should reduce the weightage of equity. Reason: Due to the equity-based formula, AP’s share fell from 7.91 per cent in the 10th FC to 6.94 per cent in 13th FC. “It penalises progressive states which are working towards controlling population growth and results in a perverse incentive of rewarding poor performance,” he noted, adding that it should be possible for the Centre to spare this order of resources if they confine their expenditure commitments to the subjects allocated to them under the Constitution.

“Instead, what we notice is an increasing encroachment into the subjects specified for States through a series of centrally sponsored schemes,” he said. Simultaneoulsy, the States are also deprived of their revenues through delays in revision of rates to royalty, resort to levy of cesses and surcharges and augmenting Centre’s own resources through disinvesment and auction of national resources like Spectrum etc.

He also demanded that while the 12th Finance Commission assigned a weight of 7.5 per cent fiscal discipline in the devolution formula, it rose to 17.5 per cent in the 13th Finance Commission. “We recommend that it may be further increased to 20 per cent,” he said.

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