The heavy revenue loss needs to be challenged before the 16th Finance Commission, said the Chief Minister stating that “It is ironic that the second highest tax paying State in the country does not get adequate reward for its contribution. We will urge the 16th Finance Commission to incentivize efficiency and fiscal performance.”
As a chief guest at a national seminar on “Fiscal Federalism: Challenges before the Sixteen Finance Commission” in Bengaluru city, in his speech Siddaramaiah, holding Finance Ministry, pointed that Karnataka’s share in tax devolution got reduced from 4.713 percent under the 14th Finance Commission and the tax devolution further got cut down to 3.647 percent under the 15th Finance Commission.
Elaborating on the losses incurred by the State, the Chief Minister said a reduction of 1.066 percent which is biggest among other States of the country and stated that under the current approach considers the income distance, as per which, Karnataka loses out due to lower distance from the highest per capita income state.
The Chief Minister felt that the Finance Commission must make necessary adjustments for the intra State per capita income differentials while arriving at the income capita income of certain districts.
Stating that Finance Commissions matter significantly in the context of resource transfers, Sidddaramaiah said that the State Governments have major expenditure responsibilities and very often not backed by commensurate revenue sources. Despite Karnataka’s proven track record of very sound tax performance, the resources are not adequate to meet the growing challenges and also attain the vision of $1 trillion GSDP (Gross Domestic Product) by 2032.
