Bengaluru, Feb 28 (NationPress) The Union government’s effort to further diminish Karnataka’s rightful share of tax revenue is not only anti-Karnataka but also constitutes a direct assault on the federal structure established by the Constitution, declared Chief Minister Siddaramaiah.

Siddaramaiah remarked: “Reports suggest that the NDA government is planning to recommend a reduction in Karnataka’s tax share from 41 percent to 40 percent via the Finance Commission. Since Prime Minister Narendra Modi assumed office, the Centre’s policies have repeatedly undermined and restricted the Constitutional rights of states.”

The Finance Commission, tasked with ensuring a fair distribution of tax revenue collected by states, is now being utilized as a mechanism to suppress states’ rights. This trend is alarming, pushing states into a position of dependency where they must rely on the Centre's discretion—a move we cannot condone, he asserted.

Decentralization fortifies democracy; centralization fosters authoritarianism. As India commemorates 80 years of democracy, it is concerning that the Union government treats states as mere subordinates rather than empowering them. This is wholly unacceptable, he stated.

Each year, the Karnataka government contributes about Rs 4 lakh crore collected from Kannadigas to the Union government. Yet, the state receives back merely 15 paise for every rupee. Due to the 15th Finance Commission slashing Karnataka’s tax share from 4.713 percent to 3.64 percent, the state has lost Rs 68,775 crore over the last five years, he alleged.

Even though the term of the 15th Finance Commission concludes next year, the Union government has not yet disbursed Rs 5,495 crore in special grants recommended by the Commission, along with an additional Rs 6,000 crore in centrally sponsored grants for Karnataka, he noted.

Furthermore, the Union government has persistently allocated Karnataka’s funds below the Commission’s recommendations. In the financial years 2021-22, 2022-23, and 2023-24, grants for urban local bodies were reduced by Rs 1,311 crore, and Rs 775 crore was cut from Panchayat Raj institutions. In 2022-23 and 2023-24, health grants were reduced by Rs 826 crore, and Rs 340 crore was deducted under the State Disaster Response Fund (SDRF), Siddaramaiah stated.

In total, Rs 3,300 crore remains outstanding, and the special grants recommended for 2024-25 and 2025-26 must be released without delay, he demanded.

He urged: “To mitigate revenue losses due to GST implementation, the GST Compensation Cess was initiated. However, even though compensation payments ceased in July 2022, the Union Government continues to collect the cess until 2026. Instead, states should be permitted to impose additional State GST (SGST) to recuperate revenue losses.”

At least half of the taxes collected in the state should be returned to Karnataka. Additionally, the Constitution must be amended to include non-tax revenue in the divisible tax pool for fair allocation, he stated.

“The Congress Government in Karnataka, through Guarantee Schemes and welfare initiatives, has garnered the trust of the populace. However, the Union government seems determined to undermine it. To accomplish this, it is denying Karnataka its rightful tax share and grants, plunging the state’s finances into a crisis. Nevertheless, the state government possesses the strength and determination to counteract such oppressive tactics. I firmly believe the citizens of Karnataka recognize this injustice,” he emphasized.

Siddaramaiah cautioned, “Should appeals and negotiations prove ineffective, we will not hesitate to take to the streets and stand in solidarity with the people.”