THIRUVANANTHAPURAM: The proposed GST reform, implementation of a two-rate structure, will have a significant impact on Kerala’s tax revenue, Finance Minister K N Balagopal has said. “Kerala’s revenue will decrease by Rs 8,000-Rs 10,000 crore a year as a result. It will be a big blow to the already strained state finances,” Balagopal told mediapersons here on Tuesday.
The state suffers an annual loss of Rs 21,000 crore after the shift to the GST regime. With the new reform, the state will find it difficult to conduct development and welfare programmes. It will affect the allocation for the Karunya healthcare insurance programme and the LIFE Mission free housing programme, Balagopal said.
According to Balagopal, the total GST revenue of the country was `22 lakh crore last year. It is estimated that the revenue will decline by `4 lakh crore after the implementation of the reforms. A corresponding decline will be witnessed in the revenue of state governments.
Balagopal alleged that the Prime Minister’s announcement on GST reforms on Independence Day was different from the recommendation made by the GST’s Group of Ministers meeting.
Kerala will raise its concerns at the GST Council meeting scheduled on September 3 and 4. Chief Minister Pinarayi Vijayan has already sent a letter to the Union government to communicate the state’s concerns.
Balagopal raised suspicion over the claim that prices of commodities and services would come down with the implementation of reforms.
“In the past, whenever the GST rates were reduced, a corresponding decline was not reflected in prices. Market prices of refrigerators increased despite the rate cut from 28% to 18%. Companies adopt the strategy of renaming models to jack up prices,” he said.