THIRUVANANTHAPURAM: A conclave of the finance ministers from five Opposition-ruled states here on Thursday flagged concerns over the rise in surcharges and cesses and the low share for states from the divisible pool of taxes. The conclave, hosted by the Kerala government, was attended by Telangana deputy CM and finance minister Mallu Bhatti Vikramarka, Tamil Nadu finance minister Thangam Thennarasu, Karnataka revenue minister Krishna Byre Gowda, and Punjab finance minister Sardar Harpal Singh Cheema, besides Kerala finance minister K N Balagopal.
Inaugurating the conclave, Kerala Chief Minister Pinarayi Vijayan said states need a higher share from the taxes collected by the Union government, adding that Kerala has been demanding that the states’ share be raised to 50% considering the “vertical fiscal imbalance between the taxing powers and expenditure obligations of the Union and the states”.
The meet also discussed the approach towards the 16th Finance Commission and issues of fiscal federalism.
“We need a strategy to reward performing states while handholding the laggards,” Kerala FM Balagopal said.
Telangana minister Bhatti Vikramakra said the Finance Commission should ensure fair and equitable distribution of resources among the Centre and states. TN minister Thennarasu said, “Effective devolution is less due to imposition of cess and surcharges.”
Punjab minister Cheema said the GST rollout limited the fiscal autonomy of states.
Karnataka Revenue Minister Gowda said the Finance Commission should recommend capping cesses / surcharges at 5%, adding that anything above that should be part of the divisible pool. Now, surcharge and cess are not part of this pool.