Jayalalithaa on GST: Autonomy of States might be jeopardised

Voicing her reservations over the Goods and Services Tax (GST), Tamil Nadu Chief Minister yesterday told Prime Minister Narendra Modi that the Centre should strive for a broad consensus on important issues like the compensation period and exclusion of commodities before enacting the Constitution amendment.

In her first meeting with the Prime Minister after her election victory, she said Tamil Nadu is concerned about the impact the proposed GST will have on the fiscal economy of the states and the huge revenue loss it is likely to cause to manufacturing and net exporting state like hers.

Jayalalithaa-led AIADMK has 13 MPs in the Rajya Sabha where the BJP-led NDA government is in a minority and looks to its support on crucial issues and legislations. The party has 37 MPs in the lower house.

While appreciating the fact that some of the state's concerns have been addressed, Jayalalithaa said in a memorandum to Modi which held that a number of other concerns of Tamil Nadu still need to be addressed.

This included the GST Council as a Constitutional body which it said impinges on the legislative sovereignty of both Parliament and state legislatures and jeopardises the autonomy of the states in fiscal matters.

"We strongly object to the provision for the GST Council. The existing mechanism of the Empowered Committee of state ministers which dealt with VAT issues is adequate. Ideally, no statutory GST Council is required," it said.

Jayalalithaa demanded that petroleum and petroleum products must be kept outside GST permanently in view of the revenue impact and the positive environmental and social impact of high effective taxation of these items.

She said there was a need to enable the states to levy higher taxes on tobacco and tobacco products on par with the Centre.