The Telegraph
Saturday , June 7 , 2014
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Jaitley to meet state FMs

New Delhi, June 6: Finance minister Arun Jaitley will meet all state finance ministers on Monday to pick their brains on the problematic areas in his maiden budget.

Officials said Jaitley might use the occasion to pitch for an early agreement on the goods and services tax (GST).

Jaitley is following a tradition established in recent years of consulting state finance ministers, who had given suggestions on fine-tuning various taxation laws as well as sought funds for regional development.

Odisha chief minister Naveen Patnaik has already asked the Centre to raise mineral royalty from 10 per cent to 15 per cent and suggested a mineral resource rent tax.

The newly elected BJP government has been toying with the idea of doing away with schemes such as the Jawaharlal Nehru National Urban Renewal Mission and the National Rural Employment Guarantee Scheme. A meeting with state finance ministers provides the Centre with the opportunity to get their perspective on the issues.

GST in focus

Jaitley will also sound out his state counterparts on quickly concluding the negotiations over GST, which promises to snuff out a large number of taxes at the central and state level and replace them with a single all-India tax.

The only sticking point could be the demands for high compensation for taxes, which the states will have to forgo in the first few years.

Though the BJP and the Gujarat government under Narenda Modi had stalled the tax, it was ironically, envisaged during the party’s earlier stint at the Centre under Atal Bihari Vajpayee. An empowered committee, headed by then Bengal finance minister Ashim Dasgupta, had been set up to work on the measure. Pranab Mukherjee and P. Chidambaram had taken it forward as finance ministers.

The Congress seems to be willing to co-operate with the new government to see the measure through. Congress leader Jairam Ramesh had said his party would “not do what Modi did to us on GST, he single-handedly derailed the most important economic initiative”.

A consensus is essential as the tax reform has to be passed by a two-third majority in both the Houses of Parliament. GST has already missed several rollout deadlines. Finance ministry officials said they had in presentations pointed out they had the IT infrastructure to administer the nationwide tax, which allowed set-offs for taxes paid at each stage of production, or marketing.