Accusing the Union government of turning the anger among people against the rising petrol and diesel prices to start a debate on bringing petroleum products under the Goods and Service Tax (GST) regime, the former Chief Minister H.D. Kumaraswamy on Sunday said that such a move would sound the death knell to the economy of the States.
The Union government is using the situation to initiate an organised discussion on the issue, the former Chief Minister said, taking to twitter. “The cess on petroleum products is among the important sources of income to the States. The Centre imposes huge taxes and collects revenue that is more than the collection of the States. Now, it is planning to take away the income of the States by bringing petroleum products under the GST.”
He said the Union government had not shared the GST revenue as per the original agreement when States agreed to have the tax regime. “The compensation part and the share in GST revenue is yet to come. Several thousands of crores due is still pending. States are drained after repeatedly begging the Centre for their dues. The fate of State finances will further worsen if petroleum products are brought under the GST,” he added.
Mr. Kumaraswamy warned, “In the absence of declining income and reduced funds for development works, there could be a situation where States have to present deficit Budget or reduce the size of the Budget. This will be going backward. Every citizen has to face the ill-effects of this.” He further said, “If the Union government is keen on bringing prices down, it should first reduce the taxes and then ask States to reduce the cess. Country will flourish if States flourish. Can the country be built by harassing States?”
Urging Chief Minister B.S. Yediyurappa to oppose any such move, he said several States had already opposed bringing petroleum products under the GST. “State leaders should oppose the move from now only otherwise GST will haunt like a noose.”
