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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