CM Stalin Seeks 50 Percent Tax Share for States, Cites Financial Strain

Chennai:Appealing for a 50 per cent share of the taxes collected by the Union Government to all the States, in an equitable fashion, and for an allocation of additional funds to better performing States, including Tamil Nadu, to ensure the overall development of the nation, Chief Minister M K Stalin said the lowering of fund allocation had come as a the financial strain to the State.

Addressing a meeting of the 16th Finance Commission in Chennai on Monday, Stalin wanted the Union Government to adopt a new approach to ensure that performing States in the country were not penalized through the reduction of fund allocation mainly to strengthen the country’s federal structure.

Complaining about the increased financial burden on the States due to the additional expenses that the States had been made to bear with for projects sponsored by the Union Government, he justified the demand for higher allocation and pointed out that the 15th Finance Commission’s recommendation for a 41 percent revenue share to the States was not honoured.

The devolution of the Union Government’s tax was only 33.16 per cent, contrary to the recommendation of 41 per cent, in the last four years, which along with the increase in the State’s share in the projects implemented jointly by the State and Union Governments had led to the State’s financial position taking a beating, he said.

In view of such a situation, Stalin wanted the State’s share in taxes to be raised to 50 per cent and said that such a move would put the State in a better position financially and enable it to take up developmental programmes depending on the needs of the people and enjoy financial autonomy by managing its own funds.

Apart from the Finance Commission Chairman Arvind Panagaria, members Ajay Narayana Jha, Annie George Mathew and Manoj Panda took part in the meeting held at the Secretariat when the Chief Minister said that though the Constitution had defined the responsibilities of the Union and State Governments, the role of States in devising schemes for the progress of key sectors health, education, social welfare and agriculture was with the States.

But ironically, the powers of the States were limited in increasing the income required to fund those schemes, he said, adding that the Commission's recommendation for funds should fulfill the needs and meet the aspirations of Tamil Nadu.

He said the present tax sharing arrangement threatened to slacken the development of Tamil Nadu that had provided an able administration and pioneered a plethora of welfare schemes that had become a model for the country and urged the Commission to make recommendations with an objective for providing equitable growth and able administration.

Such a move would place Tamil Nadu in a better position to execute developmental projects as per needs and also enable functional autonomy with regard to financial management, Stalin said. Since artificially created revenue sharing methods with short term visions would not bear fruits, revenue sharing formulae should be devised to enable efficiently-run States like Tamil Nadu continue their progress with a view to improving the economic progress of the country, he said.

The Commission that arrived in Chennai on Sunday is scheduled to meet representatives of political parties and trade associations. They will visit the Nemmeli desalination plant, too.