Kerala Chief Minister Pinarayi Vijayan on Thursday said that the cess and surcharge levied by the Centre was showing a "rising trend" and resulting in "shrinkage" of states' share in the divisive pool of taxes. Vijayan said the rise in surcharges and cesses, which are not included in the divisive pool, was happening at a time when the Finance Commission has been recommending a higher share for the states from the net proceeds of the taxes collected by the Centre.
Vijayan was speaking at a conclave of five non-BJP-ruled states organised by Kerala to discuss the key issues related to the 16th Finance Commission. He said that the 16th Finance Commission needs to factor in this rising trend in surcharges and cesses, when it recommends the prescribed share of the states from the net proceeds of taxes collected by the union government.
The CM further said that the share of the states in the divisive pool needs to be increased further from the 41 per cent recommended by the last Finance Commission. He said that Kerala and many other states have made this demand in the past with the southern state suggesting that it be increased to 50 per cent.
"The demand for a higher share for the states in the taxes collected by the Union is having continued relevance and it is my request to the eminent scholars and colleagues who are here to formulate this in a concrete manner," Vijayan said. "This will help the states to make an effective case before the 16th Finance Commission for raising the share of taxes which are distributed to the states, in view of the widening vertical fiscal Imbalances."
