TN to set up advisory council to frame Federal Fiscal Model: FM


Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Friday said the state government will set up an advisory council of tax law and revenue experts to develop a “Federal Fiscal Model”.

Presenting the budget for 2021-22 – the DMK government’s first, Rajan, pointing out the inequities in the sharing of revenues between the Centre and the states, said: “To address these issues comprehensively, as well as propose a new and comprehensive approach, this government will establish an advisory council to develop a Federal Fiscal Model with renowned experts on legislation involving revenue and taxation (including GST).”

He said the dilution in the spirit of federalism is more apparent in the taxation of petrol and diesel at the pump.

“The overall Union levies on petrol were increased from Rs 10.39 per litre in May 2014 to Rs 32.90 per litre today. Similarly, the levies on diesel were increased from Rs 3.57 in May 2014 to Rs 31.80 today,” he said.

On the other hand, the Centre reduced the basic excise duty and as a result in 2020-21, the revenue to the Union Government from petrol and diesel went up by 63 per cent from the revenue in 2019-20, but the share of the states declined sharply.

“Hence, the onus of providing relief to the final consumers of petrol and diesel lies with the Union government,” he added.

Rajan also said the Comptroller and Auditor General of India (CAG) has pointed out that the Union government cesses levied for a specific purpose have not been fully utilised for the intended purpose, and surcharges which are meant for a limited time have continued almost indefinitely.