CHANDIGARH: The AAP-led Punjab government on Thursday slammed the BJP-led Centre after the two-day GST GoM meeting, demanding immediate release of pending Rs 50,000 crore dues while accusing the GST regime of causing massive revenue losses to states.
Punjab Finance Minister Harpal Singh Cheema said GST has inflicted a Rs 1.11 lakh crore loss on the state and alleged that stopping the compensation cess was aimed at weakening state economies, forcing them to “beg with folded hands” before the Centre.
Cheema stressed that Punjab would not have suffered such massive revenue losses had it not joined the “One Nation-One Tax” scheme. With the compensation cess now scrapped, he called out the BJP government for deliberately wrecking state economies to make them beg before the Centre.
He said, "On August 20–21, the GST Group of Ministers met continuously for two days. On Wednesday, the meeting was on life and health insurance. In the evening, a meeting was held on compensation cess. The Chairman told us that today the meeting was on rate rationalisation, and that all members of the compensation cess would participate. Therefore, we also participated in Thursday’s meeting.”
He continued, "GST came in 2017. In the past eight years, there have been 27 amendments in GST, with exemptions given to different sectors. Fifteen times the GST rates of various goods were reduced. This practice has been continuing in the GST Council for the last eight years, and for the past three years I have been witnessing it myself.”
Highlighting the Prime Minister’s announcement, Cheema added, “The Prime Minister declared that there would be two GST slabs - one at 5 per cent and another at 12 per cent - and everyone would celebrate Diwali. But after GST came, who will compensate for the loss suffered by Punjab and other states? Who will pay for this damage? One Nation, One Tax was the scheme of the central government, and all states, including Punjab gave their consent. Everyone agreed that uniform tax rates should prevail across the country so that no state could impose higher or lower taxes on its citizens. But this formula has inflicted a huge loss on Punjab.”
Emphasising Punjab’s loss, he said, "In all three meetings of the GST Group of Ministers, I placed Punjab’s position. So far Punjab has lost Rs 1,11,045 crore. Punjab suffered heavy damage after the GST system was introduced. Out of this, the central government has given Rs 60,000 crore in compensation, but still Rs 50,000 crore remains with the central government. Who will pay this money?”
"Since GST was introduced, the BJP’s central government has kept making one amendment after another, but never reached a conclusion. Taxpayers of the country are being harassed continuously. The system of the country is being destroyed. Several states are continuously losing revenue due to the GST system. The central government has backed away from making up for this loss,” he added.
Detailing the latest discussions, Cheema said, "In Thursday’s meeting on compensation cess, the government said that the loans taken to pay states under compensation cess would be fully repaid by October. On harmful goods (sin goods), a special tax was imposed. The states suffering losses in its collection were being compensated. But now the report of the rate rationalisation committee shows that even the tax slab on sin goods is being reduced.”
On revenue withheld, he shared, “Punjab has suffered a loss of Rs 50,000 crore in revenue. Who will compensate for this? Will the central government make up for this loss? In addition, the central government has withheld more than Rs 8,000 crore of Punjab’s RDF. Two days ago, another Rs 1,000 crore under the Prime Minister Road Scheme was also stopped. In this way, nearly Rs 60,000 crore is pending with the central government against Punjab. This includes the Rs 50,000 crore revenue loss after GST. The central government must immediately release Rs 60,000 crore.”
He asserted that if Punjab had not joined the One Nation-One Tax scheme, it would have received much more revenue. We honoured the central government’s decision and stood with the country, but Punjab suffered for it. Along with Punjab, many other states also suffered.
Cheema said, “After GST was implemented, the central government had said that states would receive 14 per cent growth compensation under the compensation cess. Punjab’s total revenue was Rs 2,37,530 crore. But under GST, Punjab received only Rs 1,26,485 crore. Thus Punjab has lost Rs 1,11,045 crore. Out of this, the central government gave only Rs 60,000 crore, and over Rs 50,000 crore is still with them.”
“The central government had promised that any state suffering losses would be compensated. But now even the money that states were supposed to get under the compensation cess has been stopped. This means the central government wants to break the economies of state governments. The BJP’s hidden agenda is to destroy the economies of the states. This is the biggest attack on the federal structure. The BJP government wants to curtail the rights of the states. When states do not have funds, they will be forced to beg the Centre for money,” he emphasised.
Raising concern over GST rate cuts, Cheema said, "In the rate rationalisation committee meeting, we demanded that the Centre clarify who will compensate for the revenue loss to states caused by reduction of GST rates. The central government has increased some rates while decreasing others. For example, on unprocessed tobacco there was 90–98 per cent tax, but now the proposal is to bring it down to 40 per cent.”
“Tobacco is harmful to health, and higher tax was levied to discourage addiction. Tax reduction will increase tobacco consumption. On manufactured tobacco, the tax was 39–318 per cent, but it too has been brought down to 40 per cent. Pan masala had 88 per cent tax, now reduced to 40 per cent. Cigarettes had 33–64 per cent tax, now also cut to 40 per cent. Bidi had 28 per cent tax, now reduced to 18 per cent. We are not against reduction of GST rates, but the states’ losses must be compensated,” he concluded.