Continuing her protest against some of the central government?s proposals, Tamil Nadu chief minister J Jayalalithaa on Saturday urged prime minister Manmohan Singh that non-implementation of GST (Goods and Services Tax) from April 1, 2010 should not be taken as a ground to stop the CST (Central Sales Tax) compensation. She also opined that the union government must provide compensation till GST is introduced as the revenue loss suffered by the states is substantial and permanent.
In a communication to the PM, Jaya also requested that revision of VAT rate from 4% to 5% should not be linked to the CST compensation for 2010-2011 as it was not part of the original compensation package and the VAT revision had nothing to do with the CST. If further delay is expected in implementing GST, then the CST rate must be restored to the original 4%, she said in her communication.
She said, ?The Chairman, Empowered Committee of State Finance Ministers, has already conveyed the objections of the state governments, including Tamil Nadu. But it is unfortunate that the Union government is still sticking to its unreasonable stance. Though the union government had agreed to compensate the states for the revenue loss for the year 2010-2011 also, the eligible compensation for 2010-2011 was arbitrarily restricted by deducting the additional revenue realised through the revision of VAT rate from 4% to 5%.?
She said, ?I would like to point out that the union government?s action in linking CST compensation with the additional revenue on account of VAT rate revision is unilateral, arbitrary and untenable. There is no link between CST rate reduction and VAT rate enhancement. It was never a part of the guidelines for CST compensation.? She added that the decision to stop CST compensation from 2011-2012 is equally objectionable.
