GST should not undermine states' financial autonomy: Deve Gowda

Former prime minister and Janata Dal Secular (JDS) head H D Deve Gowda has asked the Narendra Modi government at the centre to ensure that the roll-out of the Goods and Services tax (GST) in April next year does not create roadblocks to states achieving financial autonomy.

In a letter to Prime Minister Narendra Modi, Gowda, himself a former prime minister, said any effort to "restrict empowerment or cross empowerment" to states in administering tax on services in the GST regime will amount to the centre going back on its earlier assurances and endanger the principles of federalism and fiscal autonomy of the states.

"Any attempt to restrict empowerment or cross empowerment to the states in administering tax on services on any reason will amount to the Centre going back on its earlier assurances and endanger the principles of federalism, as well as fiscal autonomy of the states," he said in the letter.

According to Gowda, the spirit of GST and the principles of federalism should go hand in hand without any violation or favouritism.

Gowda reminded the centre that by agreeing to the GST, the states had relinquished their exclusive constitutional right to tax goods.

"In reciprocation, the power to tax services on a mutually agreed and respectable ratio was assured to the states by the Central Empowered Committee of State Finance Ministers, which paved the way for passing of the GST Bill in the states," Gowda said.

He said that he is against GST Council's attempt to reserve a large portion of empowerment to the Central Excise Department at the cost of Commercial Tax Departments of states.

Gowda also pointed to protests by officials and employees of commercial tax departments of various states "against the GST Council's attempt to reserve a large portion of empowerment to the Central Excise department at the cost of the commercial tax departments of the states."

As an alternative, Gowada suggested that states be entrusted with larger responsibility in administration of GST in order to protect expanding avenues of revenue needed for states' development.

Gowda pointed to strikes and protests by officers and employees of commercial tax departments of various states "against the GST Council's attempt to reserve a large portion of empowerment to the Central Excise department at the cost of the commercial tax departments of the states."