Karnataka Seeks Fair Tax Devolution Reforms
Karnataka Chief Minister Siddaramaiah met Union Finance Minister Nirmala Sitharaman to advocate for reform in tax devolution criteria by the 16th Finance Commission. Karnataka experienced a significant loss under the 15th Finance Commission, primarily due to the income-distance criterion. Recommendations include adjusting weightage and discontinuing Revenue Deficit Grants.
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Karnataka Chief Minister Siddaramaiah met Union Finance Minister Nirmala Sitharaman on Tuesday to push for a pro-growth tax devolution strategy by the 16th Finance Commission. Siddaramaiah argued that Karnataka had lost significantly under the current system due to over-reliance on the income-distance criterion.
The state reported a decline in its share of tax devolution, dropping from 4.713% to 3.647%, culminating in a Rs 80,000 crore loss. Karnataka proposed reducing the income-distance weightage and reallocating resources to fiscal contribution based on state GDP share.
Siddaramaiah emphasized the adverse impact on regions like Bengaluru, urging fairness in resource allocation to boost growth. He clarified that the proposals aim to enhance cooperative and competitive federalism, not seek special treatment.
(With inputs from agencies.)
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