"Tamil Nadu has been unfairly treated by the Fourteenth Finance Commission with a drastic cut in the horizontal share from 4.969 per cent to 4.023 per cent of the general shareable tax pool and from 5.047 per cent to 4.104 per cent of the service tax pool," Chief Minister O Panneerselvam said.
Presenting the state budget for 2015-16, he said the criteria adopted by the Commission were "neither fair nor progressive" as efficiency and fiscal discipline have been totally ignored to the detriment of a "well-administered" state like Tamil Nadu.
The notion that a state with better economic growth should rely on its own resources alone was not based on any sound principle as the power of taxation was "skewed" in favour of the Central government, the chief minister said.
He said that the bulk of the tax revenue due to better economic growth achieved mainly due to state government's efforts, was through Income Tax, Customs Duty, Corporation Tax, Union Excise Duty and Service Tax, all of which accrue to the Centre and leaving only the sales tax to the states.
"The principle of co-operative federalism touted by the Government of India expects states without equal resource capacity to be equal partners with the Centre. Thus the time has come for the Central government to leave all indirect taxation to the states," so that those which lead in economic development are not dragged down for want of resources, he said.