Accusing the Centre of rechristening some of the “taxes” as “cess” to avoid sharing its revenues with States, Congress leader and former Minister Krishna Byre Gowda on Thursday alleged that Karnataka’s central share of GST and grants had reduced by a whopping ₹44,500 crore for 2022-23.
Participating in a debate in the Legislative Assembly on demand for budgetary grants, Mr. Gowda maintained that there was a shortfall of ₹20,000 crore with respect to GST compensation while the reduction in State’s central share of grants amounted to ₹24,500 crore for 2022-23.
Blaming the Centre for the drastic reduction in the State’s share, he alleged that tight financial situation had forced Karnataka to resort to borrowings to fund its budgetary schemes.
Explaining that the Centre was supposed to share whatever the amount collected as taxes with the States as per the formula recommended by the Finance Commission, he alleged that the Centre had renamed some of its taxes as “cess” as there was no need to share the revenues collected under cess with the States.
The Centre had particularly chosen petrol and diesel for this purpose as most of the excise duty on them had been converted into cess so that there was no need for it to share the revenues with the states, he alleged.
Mr. Gowda accused the Centre of following a policy of burdening poor people with more taxes and reducing the tax burden on rich corporates at a time of pandemic when the need of the hour was to provide tax relief to poor.
Substantiating his allegations, Mr. Gowda said the Income Tax, which is a major component of direct taxes and generally borne by the salaried section, had seen an increase of 217% since 2014-15 after the NDA led by Prime Minister Narendra Modi came to power at the Centre. Similarly, all indirect taxes which are equivalent of the present GST and borne by all people, especially the poor, had increased by 203% in the same period.
But the corporate tax, which is paid by rich companies, had grown by a meagre 3.9% during this period, he alleged. This would mean that the country would have collected an additional ₹ 3.10 lakh crore a year if the corporate taxes too had seen similar increase on a par with the IT and other indirect taxes, he argued. This is the money that would have been shared with the states, he said and expressed concern that the states would have been in a better position to take up welfare measures for poor if the corporate tax had grown in proportion with other taxes.
