As GST vote approaches, Tamil Nadu parties may hold the key

These parties have 19 representatives in the Rajya Sabha, including 13 from AIADMK, 4 from DMK and one each representing Communist Party of India and CPI (M)

With the Good Service Tax (GST) Bill scheduled to be tabled in the Rajya Sabha next week, all eyes are now in Tamil Nadu parties, including ruling J Jayalalithaa-led All India Anna Dravida Munnetra Kazhagam (AIADMK) and Dravida Munnetra Kazhagam (DMK).

These parties have 19 representatives in the Rajya Sabha, including 13 from AIADMK, 4 from DMK and one each representing Communist Party of India and CPI (M).
While the BJP did not have any problems in passing GST in the Lok Sabha, where it has an overwhelming majority, the Bill has been stuck in the Rajya Sabham, where the NDA parties don’t have the requisite numbers, leaving them scouting for supporters. It is there that the Tamil Nadu parties can play a decisive role in the fate of the Bill.

AIADMK has said that it is open to negotiation on the passage of the bill, and party sources indicate it all depends on how the Centre addresses the state’s concerns.

AIAMK chief and Tamil Nadu Chief Minister Jayalalithaa said recently at the Inter-State Council’s meeting that the Punchhi Commission has made certain recommendations that fully support the stand taken by the Government of Tamil Nadu.

The primary concerns are about the impact the proposed GST will have on the fiscal autonomy of states and the huge permanent revenue loss it is likely to cause to a manufacturing and net exporting state like Tamil Nadu. The revenue loss to Tamil Nadu on account of GST is estimated to be about Rs 9,270 crore annually.

The state’s demands that revenue neutrality be ensured, consensus reached on the revenue neutral rate, and of 100% compensation to states for revenue loss are in consonance with the Commission’s recommendations.

The Commission’s recommendation on subjecting polluting raw and finished materials, petroleum products, alcoholic beverages and tobacco products to non-rebatable levy is also in line with Tamil Nadu’s demand to keep petroleum products out of GST and to enable states to levy additional taxes on tobacco and tobacco products.

On the issue of institutionalising the mechanism to implement GST, the Punchhi Commission has cited the functioning of the Empowered Committee of State Finance Ministers and called for making this arrangement permanent, a state that Tamil Nadu has also taken.

“Tamil Nadu’s position on GST implementation is well known, and I do expect that our proposals will be considered favourably,” Jayalalitha said at Inter-State Council conference.

DMK’s stand has been that the GST Bill should go through some amendments before getting a final nod.

“We have submitted a representation by Kanimozhi (DMK Member of Parliament). We want to protect the interests of the state in the Bill,” said T K S Elangovan, MP from Dravida Munnetra Kazhagam. He added that he would have to check for an update from the party before commenting any further on the issue.

DMK was part of the previous Congress-led UPA government, which was then trying to pass the bill in the Parliament. While the party did not forge alliance with Congress during the 2014 Lok Sabha elections, they tied up for the Tamil Nadu legislative assembly elections in 2016.


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