Siddaramaiah Plays North-South Card Over Division of Tax Revenue Among States

Bengaluru: Karnataka chief minister Siddaramaiah has hit out at the central government and accused it of furthering the North-South divide.

"Center asks 15th FC to use 2011 Census data instead of 1971 Census used so far to determine devolution of taxes. This will further affect the interests of the south:we need to resist," tweeted the Congress leader, while tagging the chief ministers of Kerala, Tamil Nadu, Telangana, Maharashtra, and Puducherry.

Siddaramaiah was referring to the Financial Commission, a unit which every five years decides how tax revenue will be divided among various states.

One of the criteria used to allocate the funds is Population Census of 1971. The latest commission, though, has been asked by the Narendra Modi-led government to start considering the Census of 2011. Therefore, due to the higher rate of population growth, states in northern India would become entitled to a bigger share of the pie.

The previous commission introduced that idea in a small way for the first time. It gave a weightage of 10 percent for Census 2011 data and resulted in hurting states like Tamil Nadu that had seen slower growth in population as compared to states like Bihar and Madhya Pradesh.

The commission’s head, NK Singh, reasoned that the terms of reference of the 15th Finance Commission provide for incentives to states that have seen controlled population growth and so it balances out the concerns.

The 15th Finance Commission has been asked to submit its report by the end of October 2019. Its recommendations would be valid for five year period beginning April 1, 2020.

Singh said the panel would hold wide-ranging consultations with all stakeholders and would tour all the states beginning with Arunachal Pradesh in April, followed by a trip to Jammu and Kashmir and Kerala. It intends to complete the consultations with the states within 2018.

This is the first Commission after the abolition of the Planning Commission as well as doing away with the distinction of plan and non-plan expenditure.

Also, it will be the first one after the rollout of the Goods and Services Tax (GST), which has subsumed 17 indirect taxes of Centre and state including excise duty, service tax and VAT.

Officials in the Commission said the panel has no say in fixing the Terms of Reference and it is expected to adhere to the guideline given by the government. "We have no say in fixing of terms of reference but we are expected to adhere to the ToRs," an official said."