Karnataka revenue minister Krishna Byre Gowda says tax reforms will drain states
BENGALURU: Revenue Minister Krishna Byre Gowda on Tuesday issued a warning to the Centre, declaring that the proposed GST rate rationalisation could drain an additional Rs 15,000 crore from the state’s coffers, and push the annual revenue loss to around Rs 85,000 crore.”GST has bled the state dry, and now they want to cut deeper,” the minister said at Vidhana Soudha.
Since the implementation of GST in 2017, Karnataka has been losing an average of Rs 70,000 crore per year, Byre Gowda said. The new rate rationalisation proposal, touted by the Centre as a simplification reform, could cost the state an additional loss of Rs 15,000 crore annually.
Worse, the Centre has not provided any estimate or roadmap to explain how much each state stands to lose under the new plan. “They promised that GST would boost economic activity, but it has throttled state revenues year after year,” said Byre Gowda, terming it “fiscal hollowing out of states”.
The State’s revenue should have been Rs 1.07 lakh crore in 2024-25 if pre-GST growth had continued.
The actual projected revenue is just Rs 77,169 crore, a shortfall of over Rs 30,000 crore in one year alone. Over the past three years, Karnataka’s cumulative revenue shortfall is over Rs 75,000 crore, Gowda said. Worse, Karnataka’s share in Central taxes and grants has plummeted.
Gowda warned that this wasn’t just an issue concerning Karnataka, but would threaten federal stability. He accused the Centre of hoarding revenue through cess and surcharges, none of which is shared with the states. “While GST accounts for 50 per cent of states’ revenues, it forms only 28 per cent of the Centre’s revenue. Yet, the Centre pockets most of the money, leaving states begging,” he charged.
KBG appeals to GST Council
The minister appealed to the GST Council to provide full compensation to states, ensure that states don’t lose financial autonomy under any new tax structure; Reject any reform that benefits corporations at the cost of citizens and state governments.
“States can’t function with empty treasuries. If we lose revenue, the people lose welfare schemes, infrastructure and opportunities. This is not just about Karnataka — it’s about preserving the spirit of cooperative federalism,” he declared.