Tamil Nadu Slams Centre Over Tax Revenue Cut
Tamil Nadu slams the Centre over a potential reduction in States’ share of Central tax revenue, Tamil Nadu Finance Minister Thangam Thennarasu strongly criticized the Union government. He questioned whether this was how the Centre rewarded well-performing States.
The Minister stated that Tamil Nadu already receives less than its fair share. Reports suggest that the Finance Commission may reduce States’ share from 41% to 40% at the Centre’s recommendation.
Tamil Nadu Slams Centre, Calls for Fair Revenue Distribution
Thennarasu took to social media to voice his concerns. He urged the Union government to act fairly and ensure an equitable tax distribution. He reiterated Tamil Nadu’s demand for 50% devolution, emphasizing that many States support this proposal.
Fiscal federalism remains a pressing issue. States rely on tax devolution for funding essential services and infrastructure. A cut in tax revenue could significantly impact development projects and welfare schemes.
Tamil Nadu’s Concerns Over Revenue Allocation
The Tamil Nadu government has long argued that the State contributes more to the national economy than it receives in return. The Finance Minister pointed out that the current tax-sharing formula already disadvantages progressive States like Tamil Nadu.
A further cut could widen economic disparities. Many States, including Tamil Nadu, have urged the Centre to reconsider its approach and ensure a fairer revenue-sharing model.
Union Government’s Stance on Tax Devolution
The Union government argues that resource distribution must be balanced. It emphasizes the need to support fiscally weaker States. However, high-performing States like Tamil Nadu believe this approach penalizes efficiency and economic growth.
Experts highlight the importance of rewarding States that contribute significantly to the national GDP. Without proper incentives, progressive States may struggle to sustain their growth momentum.
Growing Demand for Increased Devolution
Tamil Nadu is not alone in its demand for a higher tax share. Several States have expressed concerns over declining allocations. They argue that a fair tax-sharing mechanism is essential for financial autonomy and development.
Policymakers stress that equitable revenue distribution strengthens the federal structure. Many experts believe that the Finance Commission should prioritize a balanced approach, ensuring both growth and equity.
Conclusion
The debate over tax devolution continues to intensify. Tamil Nadu and other States are pushing for a higher share, while the Union government maintains that allocations must be adjusted based on national priorities.
With the Finance Commission set to make its recommendations, all eyes are on the Centre’s next move. The outcome will shape India’s fiscal landscape and influence the future of State-Centre financial relations.
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