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Raising his concerns in a
letter to Prime Minister Manmohan Singh and Chief Ministers of all states, Tamil
Nadu Chief Minister and DMK chief M.Karunanidhi said the proposal was
"highly regressive".
In
the letter on June 25, a copy of which is available with PTI, Karunanidhi said
proposed system has "flawed design" and its "impacts have been
exaggerated while its serious drawbacks have been underestimated."
"It
is mainly the articles of common consumption which are in the lower rate bands
of VAT. The single revenue neutral rate will definitely be much higher than the
rate now prevailing at the lower bands. In short, the incidence of taxation on
the articles consumed by the common man will rise, while the rate of tax on
luxuries will fall," he contended.
He
added that the proposal that all states must have a uniform rate is diametricaly
contrary to the federal principals of the constitution, as it reduces the
autonomy of the states.
GST,
proposed by the Finance Ministry, hopes to do away with almost all indirect
taxes at the Centre and states.
Broadly,
it will replace excise duty, service tax at the Central level and VAT at the
state level.
Source :
Hindu - Chennai, India,
dated 28/06/2009 |
