{"id":310725,"date":"2024-09-19T20:36:28","date_gmt":"2024-09-19T15:06:28","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=310725"},"modified":"2024-09-19T20:36:28","modified_gmt":"2024-09-19T15:06:28","slug":"opposition-ruled-states-asking-for-a-higher-share-of-taxes","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/opposition-ruled-states-asking-for-a-higher-share-of-taxes\/","title":{"rendered":"Opposition-ruled States asking for a higher share of taxes"},"content":{"rendered":"

Source<\/strong>: The post opposition-ruled States asking for a higher share of taxes has been created, based on the article \u201cA fair share: Finance Commission must address the concerns of high-performing States<\/strong>\u201d published in \u201cThe Hindu<\/strong>\u201d on 19th September is 2024<\/p>\n

UPSC Syllabus Topic:<\/strong> GS Paper 2- Polity- issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.<\/p>\n

Context<\/strong>: The article discusses opposition-ruled States asking for a higher share of taxes from 41% to 50%. They also want limits on cesses and surcharges. It highlights how GST limits States’ tax autonomy, especially affecting industrialized regions needing specific developmental support.<\/p>\n

For detailed information on Allocation of Funds between The Centre and States<\/strong> read this article here<\/a><\/p>\n

What are the Demands of Opposition-Ruled States?<\/strong><\/h2>\n
    \n
  1. Increase in Tax Devolution<\/strong>: They demand a raise in the States’ share of the divisible tax pool from the current 41% (recommended by the Fifteenth Finance Commission) to 50%.<\/li>\n
  2. Limit on Cesses and Surcharges<\/strong>: They seek a cap on the Centre’s collection of cesses and surcharges, which are used for specific projects but fall outside the tax-sharing mechanism.<\/li>\n
  3. Funding for Key State Projects<\/strong>: States are concerned about insufficient allocations for crucial projects, such as Bengaluru\u2019s Suburban Rail Project, Kerala\u2019s Vizhinjam Port, and the second phase of the Chennai Metro.<\/li>\n
  4. Greater Flexibility for Handling Natural Disasters<\/strong>: States want more financial autonomy to address challenges like the flooding in Tamil Nadu, heavy rains in Gujarat, and the Wayanad landslide in Kerala.<\/li>\n<\/ol>\n

    How Has the Fifteenth Finance Commission Affected Wealthier States?<\/strong><\/h2>\n
      \n
    1. The Fifteenth Finance Commission allocates 45% weightage to State Gross Domestic Product differences, prioritizing poorer regions.<\/li>\n
    2. This reduces the funds for wealthier States like Gujarat, Karnataka, Maharashtra, and Tamil Nadu, which are major tax contributors.<\/li>\n
    3. These States require funds for capital and social expenditures tailored to their economic and industrial needs.<\/li>\n
    4. Limited devolution restricts these States from addressing their unique development, climate, and industrial challenges, hindering their economic progress.<\/li>\n<\/ol>\n

      Why Is There a Call for Change?<\/strong><\/h2>\n
        \n
      1. The current tax-sharing system, along with the GST framework, restricts States\u2019 ability to raise their own funds.<\/li>\n
      2. High-performing States are struggling to meet their economic and social needs due to limited devolution.<\/li>\n
      3. Additionally, neither the GST nor the Finance Commission considers the cost of managing natural disasters.<\/li>\n
      4. Need for changes in the tax devolution system to give more power to the States and support truly federal governance.<\/li>\n<\/ol>\n

        Question for practice:<\/strong><\/p>\n

        Examine how the demands of opposition-ruled States for increased tax devolution and limits on cesses and surcharges reflect their concerns about financial autonomy and regional development.<\/p>\n","protected":false},"excerpt":{"rendered":"

        Source: The post opposition-ruled States asking for a higher share of taxes has been created, based on the article \u201cA fair share: Finance Commission must address the concerns of high-performing States\u201d published in \u201cThe Hindu\u201d on 19th September is 2024 UPSC Syllabus Topic: GS Paper 2- Polity- issues and challenges pertaining to the federal structure,… Continue reading Opposition-ruled States asking for a higher share of taxes<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,1234],"tags":[212,225,10498],"class_list":["post-310725","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-polity-current-affairs","tag-gs-paper-2","tag-polity","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/310725","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=310725"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/310725\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=310725"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=310725"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=310725"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}