2024-01-19 10:54:01
The UDF will not participate in the strike that the state government has decided to hold in Delhi against the central government’s policies. Opposition leader VD Satheesan sent a letter to the Chief Minister clarifying this. A decision in this regard was taken in the UDF meeting. On February 8, the state government decided to organize a strike against the central government in Delhi.
The opposition leader said that the UDF has already pointed out that it cannot agree with the narrative that the Centre’s neglect is the cause of all the financial crises Kerala is facing.
Central neglect is only one of the many causes of the financial crisis. There are problems on the part of the state government including mismanagement in tax administration. The opposition leader said that the government, which did not take the opposition’s arguments at face value, had pointed out these issues through two white papers.
The meeting ended with the Chief Minister’s proposal to hold a strike in Delhi, and the UDF would give a reply after discussing it. But the government announced the date of strike in Delhi unilaterally. VD Satheesan said in the letter that this is not a political courtesy.
Opposition leader’s letter to Chief Minister in full
Thank you for inviting the opposition to discuss the state’s finances and central neglect. The Chief Minister had pointed out the problems from the Centre’s side in the meeting. The opposition also agrees on some of these things. These matters have already been brought to the attention of the Union Finance Minister by a delegation led by UDF MPs.
In the meeting itself, we made it clear that we cannot agree with the narrative that the Centre’s neglect is the cause of all the financial crises Kerala is facing. Central neglect and mismanagement of tax administration on the part of state governments is just one of the many reasons for the fiscal crisis. These issues were pointed out and warned by the opposition through two white papers and the government, which did not take the arguments of the opposition at face value, and the UDF suspects that there is not only state interest but also political interest behind calling the opposition for discussion at the threshold of the Lok Sabha elections.
The state is going through a financial crisis that has never been seen in its history till date. Many factors including failure in tax collection, mismanagement and corruption have led to this crisis.
The main reasons for the fiscal crisis are non-reformation of the tax administration in line with GST, loss of revenue from the IGST pool and failure to collect tax on gold and bars. Corruption and embezzlement in the name of mega projects have fueled the financial crisis.
Tax evasion takes place with the connivance of the government and the tax department. Kerala, which was supposed to be the biggest beneficiary of GST, has become a tax evader’s paradise and the tax administration has failed miserably.
For the past seven years, your government has proceeded without taking any steps for resource mobilization and relying only on borrowing. Despite warning in this regard in two white papers issued by the UDF, it was ignored.
Instead of streamlining tax collection, a shortcut was taken to overcome the fiscal crisis by increasing all taxes and introducing cess. But as warned by the opposition, this has backfired with the introduction of Rs 2 cess and the consumption of diesel has gone down. Due to this, the income that was getting earlier has also disappeared. Apart from the price rise, the government should also see that with the imposition of excessive tax burden, the people are unable to make ends meet.
Kerala is the most benefited state as a consumer state when GST is implemented. According to the NSSO sample survey, Kerala is also the state that uses the most freight services in the country. 80 percent of Kerala’s products come from other states or abroad. Therefore, inter-state tax or IGST is applicable on these. Huge tax evasion is taking place in B2B (Business to Business) where goods are brought from other states without invoice and sold directly in B2C (Business to Customer) where the consumer buys goods directly from other states and uses them in Kerala. Loss of revenue to the state.
The GST department was reorganized in name only. Since the audit department has been formed but has not yet started its operations, around 700 employees have been receiving salaries for almost a year without doing any work. It should be remembered that the GST department is turning a blind eye to the tax evasion of the big people, and it is your government that used the GST officers who are supposed to detect tax evasion to collect money from the tax evaders for Kerala and New Kerala seats. Awarded the trophy for the best collector by the Chief Minister and the top officer of GST, what can such officials do but pretend that they have not seen tax evasion by the big guys?
Kerala consumes 28% of India’s annual gold imports. Kerala also ranks first in per capita gold consumption. Even in this situation, the government does not get even 20 percent of the total gold sales tax in the state, thus the state has a tax loss of at least 18,000 crore rupees a year.
Since 2019, the opposition has given warnings and creative suggestions that the GST compensation will end by June 2023 and there is no other way to overcome this but to increase its own tax revenue. The government was not ready to study the loss of tax revenue after the implementation of GST or to prepare the officials in a way to increase the tax revenue.
The 15th Finance Commission’s cut in central tax allocation to Kerala also contributed to the fiscal crisis, while the 14th Finance Commission allocated 2.5% of the Centre’s divisible pool to Kerala, while the 15th Finance Commission reduced it to 1.925%. The reduction in tax share was due to the new criteria of including population as per 2011 census instead of 1971 census. This is not acceptable and this is the position taken by the Congress nationwide. UDF MPs have directly informed the Union Finance Minister about this.
The meeting broke up with the understanding that the Chief Minister’s proposal to strike in Delhi would be discussed in the UDF and the reply would be given. But the government announced the date of strike in Delhi unilaterally. It is also a reminder that this is not political etiquette.
Yesterday, the UDF meeting unanimously decided that there should be no strike with the government as the cause of the financial crisis is the mismanagement, corruption and waste of the state government. I humbly inform you of the UDF decision.
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