Siddaramaiah invites eight CMs to discuss unfair devolution of taxes
Bengaluru: Karnataka Chief Minister Siddaramaiah on Wednesday wrote to the Chief Ministers of Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra, Gujarat, Haryana, and Punjab regarding the unfair devolution of taxes by the Union government.
He said that the states with higher GSDP per capita, like Karnataka and others, are being penalised for their economic performance, receiving disproportionately lower tax allocations. This unjust approach undermines the spirit of cooperative federalism and threatens the financial autonomy of progressive states.
“I have invited them to a conclave in Bengaluru to collectively deliberate on the issues of fiscal federalism at a juncture when the Finance Commission needs to make a directional shift and create incentives for growth and better tax mobilisation,” the Chief Minister said.
“As you are aware the 16th Finance Commission has begun its deliberations. The previous Finance Commissions have laid excessive emphasis on equity at the cost of efficiency and performance. As a result, states with higher GSDP per capita and higher contribution to the gross tax revenues of the union are progressively receiving lower shares of the central fiscal transfers,” the letter reads.
“States with strong contributions to the country’s GDP and Gross tax Revenue, help build the nation in more than one. Therefore, there is an urgent need to balance equity with efficiency and performance for a stronger union, both politically and economically. It is therefore important that states which are receiving smaller shares in horizontal devolution, compared to articulate a coordinated set for proposals before the commission.
“It is my pleasure to invite you to a conclave in Bengaluru to discuss these issues further. I will send a separate invitation indicating the dates once we firm up the schedule,” CM Siddaramaiah stated in his letter.