CHENNAI: According to the White Paper presented on Monday, several moves by Centre resulted in a reduction in the revenue of the State government. The decline in Tamil Nadu’s share of the divisible pool of Union taxes in successive Finance Commission periods has cost the State dearly.
This share declined from 6.637 per cent during the 10th Finance Commission (1996-2000), to 5.385 per cent during 11th Finance Commission, 5.305 per cent during 12th Finance Commission, and 4.969 per cent during 13th Finance Commission.
There was a drop of almost 20 per cent in TN’s share during 14th Finance Commission to just 4.023 per cent. The high weightage to the per capita income distance criteria combined with the relatively higher per capita income of Tamil Nadu in the years 2010-11, 2011-12, and 2012-13, primarily caused this considerable loss. The switch to using the 2011 Census population by both the 14th and 15th Finance Commissions adversely affected Tamil Nadu and other States. The weightage for the area criteria and the introduction of forest cover also affected State, the paper stated.
Also, the share of States in financing a number of centrally sponsored schemes was substantially increased. Concessions provided on the levy of certain taxes by the Union government have resulted in lower resource flows to the State. Most notable in this regard is the sharp reduction in Corporate Income Tax rates in the Union Budget for 2017-18. This has, in a number of ways, been a regressive step as it has reduced the share of direct taxes as a proportion of overall taxes.