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Senior
finance ministry officials said reservations of the
states were more on political lines than on actual
impact on their revenue since the GST regime is expected
to be ‘revenue-neutral’ for both the Centre and states.
Opposition to the proposed GST is likely to come
particularly from the BJP-ruled states. A Gujarat
government official said the state had reservations on
the impact of the GST on its revenues.
“Our
doubts have been conveyed during the last meeting of the
committee. The stand would remain more or less same,” he
said.
Besides the BJP, the Union government is facing doubts
expressed by its own ally DMK, which rules Tamil Nadu.
It has not only said that the April 2010 deadline is
“premature” but has also questioned the constitutional
validity of the empowered group to discuss introduction
of the GST.
The group was formed to see the transition into the
value added tax (VAT) regime that had replaced sales tax
and tried to bring uniformity among states. After the
introduction of VAT, the group continued with the
responsibility of tackling the roadmap for GST besides
other teething issues about VAT.
Chhattisgarh and Madhya Pradesh have also expressed
reservations on GST.
While Chattisgarh chief minister Raman Singh in a letter
to prime minister Manmohan Singh earlier this year said
the estimate of revenue loss to states have not been
made yet, Madhya Pradesh chief minister Shivraj Singh
Chauhan said the introduction of GST would lead to
increase in tax burden for small industry and compliance
cost for the government.
Countering criticism, the finance ministry official
said, “The GST regime will increase the tax base and
revenue for the governments. Just as in the case of VAT,
there may be initial opposition from the states but they
are likely to fall in line slowly.”
Source :
Business Standard, India, dated 22/08/2009
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