Tamil Nadu Chief Minister J. Jayalalithaa has written to all her counterparts to rally support for her view that the central government should strive for broad consensus on the issue of Goods and Services Tax (GST).
In a letter to the chief ministers of all the states Wednesday, text of which was released to the media here Sep 11, Jayalalithaa said: “I do hope you will agree with my views that, before enactment of the Constitutional Amendment Bill on GST is taken up, the government of India should strive for a broad consensus on the important issues relating to GST without compromising the fiscal autonomy of the states.”
Referring to the revised draft Constitutional Amendment Bill on GST circulated by the central government, Jayalalithaa said there are number of serious concerns on the impact of proposed GST whould have on the fiscal autonomy of the states.
She said the proposed GST would result in huge permanent loss for the states.
Jayalalithaa also enclosed her letter to union Finance Minister Arun Jaitley wherein she had raised the apprehensions of the state over the loss of fiscal autonomy and permanent loss of revenue.
She also urged Jaitley that the central government should strive for a broad consensus on important issues relating to GST and allay the apprehensions over loss of fiscal autonomy and permanent revenue.
According to Jayalalithaa, an independent compensation mechanism and methodology should be enshrined in the constitution for revenue losses suffered by the states and it is a prerequisite for implementation of GST.
She said manufacturing states like Tamil Nadu stand to permanently lose substantial revenue if GST is implemented, due to the sudden shift of levy from the point of origin to the point of destination.
“The proposal of the government of India to bring petroleum products under the ambit of the Goods and Services Tax is another area of concern which would seriously diminish the limited revenue resources of the States,” Jayalalithaa said.
She said the dual levy of tax – by the state and the GST – is not acceptable, as a portion of the tax on petroleum products would still be eligible for Input Tax Credit.