States likely to ask for some fiscal autonomy in GST

Fearing that their fiscal autonomy will be impacted by the uniform tax structure, state finance ministers are likely to bargain for some flexibility on proposed Goods and Services Tax when they meet Union Finance Minister Pranab Mukherjee on July 21.    

"Strict harmonisation of tax structure across the country would affect the states' fiscal autonomy," Andhra Pradesh chief minister K Rosaiah had said.
    
The states would not be able to independently take any decision to mobilise additional financial resources by taking recourse to increase in the rates of taxes, he had said.

"States should be given power to impose supplementary taxes, for instance state excise, on goods, kept outside the GST, i.E., liquor and on petroleum products so that there can be some degree of flexibility to raise additional financial resources in times of need," he had said.

GST, scheduled to be implemented from April 1, 2011, will replace the excise duty and service tax at the central level and value-added tax at the state level, besides the cess, surcharges and local taxes.
    
State governments are likely to bargain for retaining some degree of control over tax matters in order to be able to raise resources to implement their social and economic programmes.
    
Besides, the states have asked for an adequate constitutional safeguard against automatic prevalence of Union laws over the state laws in case of any conflict if the subject is placed in the Concurrent List.