Chennai : Tamil Nadu Chief Minister J. Jayalalithaa Monday charged the central government with trying to bulldoze in parliament the Constitution (115th Amendment) Bill, 2011, introducing the Goods and Services Tax (GST), which would “encroach” on the powers and autonomy of states.
Any tax reform should improve economic efficiency and encourage economic activity without impinging on the constitutional scheme of distribution of powers and fiscal autonomy, she said in a letter to Prime Minister Manmohan Singh.
“I wish to convey, through this letter, the strong reservations of my Government with regard to the manner in which the Government of India is endeavouring to bulldoze through this piece of legislation which encroaches upon the powers vested with the states by the Constitution of India,” she said in the letter, dated Aug 18, copies of which were released to the media here Monday.
Jayalalithaa has also written to all the non-Congress chief ministers to oppose the GST Bill which, she said, is the central government’s “clandestine and sinister attempt” to erode legislative and fiscal powers of states.
She urged the non-Congress chief ministers to take up the matter with the central government in a “co-ordinated manner to impress upon the centre that the fiscal autonomy of the states should not be compromised in any way”.
In her letter to the prime minister, she said: “Our main concern with the GST is that, in the name of harmonisation, the state’s already limited authority to levy taxes should not be snatched away.
“Further, constitutional mechanisms like the GST Council and the GST Dispute Settlement Authority impinge on the legislative sovereignty of both Parliament and the State Legislatures,” she said.
“We also strongly believe that harmonisation will not be achieved merely by adopting a common rate for all the commodities across the country when the States are having diverse resource bases and requirements,” she added.
Stating that implementation of GST with two rates initially, which will then converge into a single rate later is unworkable, Jayalalithaa claimed that states like Tamil Nadu will suffer a huge loss of more than Rs.5,000 crore per annum.
“A broad consensus on the framework of GST tax structure, procedure, etc. should first be arrived at through a proper consultative process,” she urged.
“Therefore, I am of the opinion that before the Government of India pushes through this bill in Parliament, it is necessary that the consultative process among all States and the Centre is taken forward to come to a broad understanding on the framework of the GST,” Jayalalithaa’s letter said.