The Telegraph
Saturday , January 4 , 2014
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Higher tax share cry

A joint memorandum, to be submitted to the Finance Commission on January 7, would demand income-distance criteria to be given more weightage for devolution of central taxes to the states.

Asian Development Research Institute (ADRI) co-ordinated with various political parties, academics, professionals, trade and industry bodies to bring out the memorandum on the basis of their suggestions and inputs.

The 14th Finance Commission team, formed under the chairmanship of former RBI governor Dr Y.V. Reddy, would be on a three-day visit to the state from January 6. The commission, which would cover a five-year period from April 2015 to March 2020, has to make its report available to the Government of India by October 31, 2014.

A finance commission is constituted every five years in accordance with the constitutional mandate to recommend the distribution of the divisible pool of financial resources of the centre among the states.

Leaders of all political parties and other professional bodies would jointly submit the memorandum to commission chairman Reddy on January 7 in the state capital, while the state government is expected to submit its memorandum to the commission on Monday.

On the important suggestions of the memorandum, water resources minister Vijay Kumar Choudhary said: “Income-distance criteria, which shows the distance from national per capita income, should be given 70 per cent weightage for tax devolution.”

Explaining the income-distance criteria, ADRI member secretary Shaibal Gupta said: “Bihar’s per capita income was the lowest in the country and hence, the commission should restore the income-distance criteria, which the 13th Finance Commission had shelved and adopted fiscal capacity distance criteria, which measures the distance of the estimated potential per capita tax revenue of each state. On the other hand, income-distance criteria, adopted by the 11th and the 12th finance commissions for devolution of taxes, links grants with the level of per capita income.”

He added that lower the income higher the grant would be and Bihar would be benefited from the restoration of the criteria. Moreover, the memorandum also talks about giving 20 per cent weightage to the population but that should be based on the 2011 census instead of using data of 1971 census, Gupta said.

PHD Chamber of Commerce and Industry state unit president Satyajit Kumar said: “The commission would finalise its report in October, 2014 after taking suggestions and demands of all state governments. Hence, regular canvassing to get the memorandum noticed by the commission is required.”

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