Kerala to ask for increase in state's share to 50 percent
Thiruvananthapuram: The Kerala Government today decided to ask the Centre to increase the state's share in central taxes to 50 per cent from the present 42 per cent. The decision in this regard was taken at the cabinet meeting chaired by Chief Minister Pinarayi Vijayan here today.
The Union Government had in February 2015 increased the share of states in central taxes from 32 per cent to 42 per cent, accepting the recommendations of the 14th Finance commission. This was said to be the single largest increase ever recommended.
The cabinet also approved the directions and recommendations in the memorandum, which will be submitted to the 15th Finance commission during its three-day visit to Kerala from May 28. The Commission will be in Kerala from May 28 and hold discussions with political parties.
It would meet government representatives on May 29 and also visit different institutions at Thrissur on May 30. Kerala has been highly critical of the ToR, saying it is against the state's interests and a 'threat' to its economy.
There are also fears its tax share would come down to 1.8 per cent from the present 2.5 per cent if the 2011 census was taken as the base for allocation of central tax revenue. Hence, the state will demand that devolution should be on the basis of the 1971 census, an official press release said.
The government also demanded that there be no dip in the allocation in the state's tax revenue and the criteria recommended by the 14th Finance commission be followed.
The release said the state government was committed to ensure that fiscal deficit remained at three per cent of the state's internal revenue. Kerala had convened a meeting of Finance Ministers of southern states here on April 10 to arrive at a consensus on their response to the Terms of Reference.
State Finance Minister Thomas Isaac had held that these states were being 'penalized' for successfully implementing national policies. A similar meeting was also held on May 7 at Amravati in Andhra Pradesh to discuss the commission’s proposals.