MP govt refuses to buy Centre's GST concept

The Madhya Pradesh government has refused to buy the Centre’s concept of introducing a single slab of the goods and service tax (GST) and has said this will raise prices of essential commodities.

“The Centre has proposed to introduce single slab of GST and impose 16 per cent tax on all edibles like sugar, pulses and edible oils. The Centre is making a populist decision. It has also turned down the state’s demand of paying compensation against central sales tax for 2009-10 and 2010-11,” state Finance Minister Raghavji said. He recently participated in the empowered committee meeting on GST in New Delhi.

The minister said earlier the Centre had floated a “white book” concept for GST and accordingly there were two slabs. “We had supported the Centre on excluding electricity duty, stamp duty and motor vehicle tax out of the ambit of GST, but now the Centre wants the single tax system. The single slab will strip us off imposing taxes,” Raghavji said and pointed out, “The direct tax revenue of the states, after opening up of economy, has gone down from 0.2 per cent to 0.1 per cent while indirect tax revenue has gone up from 5.1 per cent to 6.4 per cent. Normally, direct tax revenue share in tax collection is always 70 per cent and above. The Centre must provide more rooms to levy indirect taxes.”

He advised, “The Centre and state revenue sharing in direct taxes should be in ratio of 40:60 and not 50:50 as proposed in the GST. The National Institute of Public Finance has also advised to remove Central sales tax from declared goods as these goods are used by household. The Centre must put these commodities under ambit of the state tax system,” he said.

Demanding immediate compensation from the Centre Raghavji said, “The Centre must entrust the task of collecting tax in road transportation, education and other financial services to the states. It will provide an alternate means of compensating states against Central sales tax, which was slated to be brought down to zero per cent this year.”