Kerala Finance Minister Addresses GST Reform concerns, Revenue Impact
Kerala finance Minister KN Balagopal has responded to concerns regarding the impact of Goods and Services Tax (GST) reforms on state revenues, emphasizing the need for a thorough examination of the benefits and drawbacks of current policies. While welcoming GST reform in principle, Minister Balagopal highlighted potential financial losses for Kerala resulting from recent changes.
According to the Finance Minister, Kerala stands to lose approximately Rs 2,500 crore in revenue across four key sectors: automobiles, cement, electronics, and insurance. He noted that while increased taxes on certain goods might initially appear beneficial, companies frequently enough absorb thes costs by adjusting prices, ultimately impacting overall revenue collection. The Minister expressed concern that the central government’s approach doesn’t fully account for these dynamics.
Minister Balagopal also stated that the state government has not received a satisfactory response to its requests for a extensive study assessing the impact of GST reforms on state finances. He stressed the importance of data-driven decision-making, rather than relying on “popular declarations” or superficial consultations.He argued that a detailed analysis is crucial to understanding the true effects of the reforms.
Disagreements between the state and central governments extend to specific tax rates. Kerala’s request for a higher tax rate on tobacco products – perhaps up to 40% – was not accepted,with the central government indicating that any additional revenue generated would not be shared with the states. Similarly, the state’s proposal to maintain a 28% tax on lotteries was also rejected, with the Minister pointing out the potential negative impact on the sector.
Minister Balagopal further illustrated the financial implications by comparing current GST revenue with pre-GST figures. He stated that prior to GST implementation, Kerala would have received approximately Rs 600,000 crore in revenue.However, the actual revenue received since GST implementation has been Rs 32,773 crore. The central government has also resisted calls for states to receive a greater share of revenue from taxes on cigarettes and tobacco.
The Finance Minister reiterated Kerala’s commitment to constructive dialog with the central government to address these concerns and ensure a fair and equitable GST framework that benefits both the state and the nation.
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