Pawar raised poor tax collection issue in January

Mumbai: Nationalist Congress President (NCP) chief Sharad Pawar sounded an alarm over the deterioration in tax collection in Maharashtra in a letter to the Finance Commission in January 2018 where he cited a statement by chief minister Devendra Fadnavis.

The veteran politician asserted that the Goods and Service Tax (GST) system had not yet stabilised and that was harming the state’s economy. The Asian Age is in exclusive possession of this letter. The Finance Commission has been on a visit to Maharashtra from Monday and has mentioned the sharp decline in tax collection in the state since 2014.

The Finance Commission had sought the views of political leaders across the country over various societal issues. Mr Pawar, while replying to the commission on January 29, 2018, had written, “The GST regime has not yet stabilised. The chief minister of Maharashtra has stated that he would approach the Central government to make up for the deficit from expected GST revenue to the extent of '1,000 crore to '2,000 crore.”

Mr Pawar’s letter further reads, “The position of many other states might be similar. With the introduction of GST, state governments are left with very few tax handles to increase revenue from other taxes/charges/cesses to make up for the deficit in GST revenue.”

Interestingly, the 15th Finance Commission in its report observed the sharp decline in tax collection of Maharashtra. The commission is presently meeting people across all corners of the state to note their concerns about the economy. In this backdrop, the eight-month-old letter holds importance.

The commission in its report observed that, “A revenue deficit of 0.5 per cent to Gross State Dom-estic Product (GSDP) continues to be a worrisome factor for Maha-rashtra.” This report has kick-started a debate over the state’s economy.

Meanwhile, NCP state chief Jayant Patil met Finance Commission chairman N.K. Singh and demanded the removal of Arun Jaitley as chairman of the GST Council. He said that the council should have a chairman from the committee of finance ministers of the state. “When there was VAT system, finance ministers of all states used to seat together and take a decision. But, now powers are centralised with Mr Jaitley. And this council takes a decision just before the elections to give relief to the people of a particular state. This is political. So, this immediately needs to be changed. We should form a committee of finance ministers of the state and a senior-most minister should be appointed as president. This will end the possibility of using the GST Council for political purposes,” Mr Patil told the commission.