CM trains guns on Union Government on GST

CHENNAI: Ten days after blowing the bugle for waging a war against the Congress-led UPA government at the Centre for trying to usurp the powers of the State governments and seeking the support of the non-Congress CMs and MPs in opposing the move, Chief Minister J Jayalalithaa kept up her attack on Monday, this time on an issue that would interfere with the fiscal autonomy of the states — the proposed Goods and  Services Tax (GST).  She also sent letters to all non-Congress CMs urging them to take up the matter with the Centre in a co-ordinated manner.In her letter to Prime Minister Manmohan Singh, Jayalalithaa sought his intervention to take the states on board by continuing the consultative process to arrive at a broad consensus on key issues on GST before considering an Amendment Bill on the subject.Jayalalithaa said that at this juncture, the states are not clear about various critical issues, including the tax structure, methodology of Integrated Good and Services Tax, powers of the State in altering tax rates, levying cess, giving exemptions to certain commodities of local importance and the compensation mechanism.  In states like Tamil Nadu, where the tax neutral rate is as high as 17 per cent, implementation of GST would lead to a loss of over `5,000 crore per annum, the CM pointed out.“Where there is no clarity on such critical matters, pressing for an enactment of the Bill will not yield any results and is bound to be counter productive. Approval of this Amendment Bill by any of the states will amount to entering into an unknown territory fraught with risk and uncertainty,” Jayalalithaa pointed out.Through the proposal to set up the GST Council as an advisory authority, which will take decisions through consensus, the GST Dispute Settlement Authority proposed under Article 279-B will have an overriding authority on the states as its decisions are binding on the States. “This means the states virtually lose their authority to fix tax rates, which is unconstitutional and not acceptable in a federal set up. The Council and the Authority impinge on Parliament’s authority,” the CM said.She listed various issues that need to be addressed before proceeding with the Amendment Bill. They include exclusion of Entertainment Tax collected by local bodies, proposal to enable the Centre to levy tax on tobacco and tobacco products, convergence of tax rates for essential and luxury goods, adoption of a uniform threshold for levying of SGST and CGST, usage of the State tax machinery for collection of CGST up to a threshold level, formation of an autonomous body for computation and disbursal of compensation, guarantee for abiding by a pre-agreed compensation framework, evolution of a workable IGST model and institutional and infrastructural preparedness across the states. “There is no point in proceeding with the enactment of the Amendment without addressing them completely.”“The manner in which the Government of India is undertaking the implementation of the GST amounts to interfering with the fiscal autonomy of the states thereby having the potential to jeopardise the federal framework of distribution of fiscal powers between the States and the Union,” she added.