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- Karnataka Revenue Minister said states expected to lose 1 to 1.5 lakh crore rupees in revenue
- Minister criticised Centre for placing all GST rate reduction burden on states
- Centre may gain 50,000 to 60,000 crore rupees while states face revenue losses, he said
Did our AI summary help? Let us know. Switch To Beeps Mode New Delhi: Karnataka Revenue Minister Krishna Byre Gowda said that while he supports the new GST structure that came into effect on Monday, it is likely to cause a revenue loss of at least 1 to 1.5 lakh crores to states. While speaking to NDTV's Executive Editor TM Veeraraghav, the minister hit out at the Centre, saying it has placed all the "burden of rate reduction" on the states.
"We have been supportive of the proposal for rate rationalisation and rate reduction. There was no disagreement on that issue. The disagreement is in the way the Centre has placed all the burden of this rate reduction on the states. States are likely to lose anywhere between 1 to 1.5 lakh crore of revenues. So it is going to hit at the very core at their fiscal stability," Mr Gowda said.
According to Mr Gowda, the revenue losses would make states dependent on the Centre.
"You are hitting at the very core of federalism itself. It is not cooperative federalism, this is just one way. This is going to hurt the states," he said.
Mr Gowda said that while the states are losing revenues, the Centre may end up earning 50,000 to 60,000 crores of additional income. "So the Centre benefits, states lose. This is not in the interest of the union. This was our only concern and demand that the states' revenue losses be taken care of," he said.
"Let me step one step further and tell you that we did not expect anything from the Centre's kitty to compensate for the states. We only suggested that the erstwhile cesses, which the central government is now taking over as a central tax, be continued and that money be used to compensate for the loss of the states. We were not placing any additional burden on the Centre," Mr Gowda added.
The Centre, however, did not take the concerns seriously, Mr Gowda said.
"They were quite dismissive," he asserted.
Questioning why the Centre would not assure revenue protection to states, Mr Gowda said, "The conversation seems to be in the format of convening a meeting and sitting together, and discussing some issues. The central government is functioning in a 'I have my say, you have your way' manner. Unfortunately, I have not seen any further movement on this issue, so I have to assume not being privy to any other designs or plans the Centre might have. I have to conclude that there is no progress on this issue. What is the difficulty in agreeing on a revenue protection?"
"The buoyancy is going to take care of itself, and any assurance of protection is only an insurance. Then what do you have to lose from it? The easiest thing the Centre could have done is agree to revenue protection. If you are so convinced by your own argument, then what is the issue? It would not have cost you anything, but it would have earned you goodwill," he added.
The new GST structure came into effect on Monday, with a plethora of household items, cars, bikes, and TVs, among others, becoming cheaper. The changes, the biggest overhaul since GST was introduced in 2017, will see the current 5 per cent, 12 per cent, 18 per cent and 28 per cent structure replaced with just two rates - 5 per cent and 18 per cent.
Under the new reforms, daily food and essentials, life and health insurance policies, automobiles and transport, electronics, appliances, stationery, beauty services, lifestyle services, and machinery will become cheaper. The ultra-luxury items will be taxed at 40 per cent, while tobacco and related products will stay in the 28 per cent plus cess bracket.
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