Pushing for a greater play in Centre-state relations, state governments have asked the 13th Finance Commission to increase their share in the divisible pool of central taxes to 50% from the existing 30.5%.
Finance ministers of over 15 states led by West Bengal finance minister Asim Dasgupta met the 13th Finance Commission headed by Vijay Kelkar on Tuesday to present their combined views on their financial relations with the Union government. ?Given that states have to shoulder most of the expenditure on development and administration, we have requested that states shouldbe given 50% of the gross Central taxes and all Central surcharges and cess should be included in the divisible pool. An additional devolution for the northeastern and Special Category states may also be considered,? Dasgupta said after the meeting.
Besides, states should also be given the power to concurrently tax all taxable services, a move which can be introduced along with the goods and services tax regime from 2010.
States have also sought a higher share in market borrowings, which should be raised to 50% depending on their needs. The commission should also permit them to access market borrowings and issue tax-free bonds. With the Centre implementing the recommendations of the Sixth Pay Commission, state government employees have also demanded higher salaries. In this regard, states have asked the TFC to recommend that the Centre should share at least 50% of their expenditure on this. Alternatively, the financial burden should be fully accommodated by the commission while assessing the expenditure needs of states.
In their presentation, state FMs have also pointed out that there has been a proliferation of Centrally Sponsored Schemes relating to state subjects. Such schemes along with their funds should be transferred to the state governments in order to ensure better implementation.