CM Siddaramaiah seeks fair tax share for Karnataka from 16th Finance Commission

Bengaluru: Chief Minister Siddaramaiah on Friday said the government has placed its “legitimate and constitutionally grounded” demands before the 16th Finance Commission seeking justice in tax devolution and fiscal federalism, and expressed hope that the Union government would implement the commission’s recommendations without discrimination.

In a note to the media, Siddaramaiah said Karnataka, despite being among the highest contributors to national revenues, had seen its share in central tax devolution reduced from 4.71 per cent to 3.64 per cent earlier, resulting in an estimated loss of nearly Rs 80,000 crore.

Flawed formulas penalising development and population control, unrealistic GSDP calculations, inadequate disaster relief, unchecked cesses and surcharges, denial of GST compensation and non-release of recommended grants have weakened the state’s finances, he alleged.

Siddaramaiah said the government has launched the ‘Justice for Karnataka - Fair Share, Strong Federalism’ campaign and released nine posters highlighting key demands, including the restoration of the tax share, which was reduced from 4.71% to 3.64%.

The state’s other demands include a reduction in income distance weightage from 45% to 25%, restoration of the use of 1971 population data in tax sharing, and correction of the unrealistic GSDP base-year methodology, as IT exports inflate the state’s GSDP and distort fair comparisons.

The government mooted the adoption of a Panchayat devolution index in fund allocation for effective governance in local governments.

Besides, a special package of Rs 10,000 crore for the backward Kalyana Karnataka region, special grants for ecology, farmers and irrigation projects, and an increase in the state’s share of taxes to 50% and a cap on cess at 5% are part of the demands.