GUWAHATI: The Chairman of the 16th Finance Commission (FC), Arvind Panagariya, revealed in a press meet on Thursday, September 26, that Assam Chief Minister Himanta Biswa Sarma has raised concerns over the steady decline of tax devolution to the state. Sarma sought immediate measures to address this downward trend.
ALSO READ: Two New Railway Stations In Assam Awarded ‘Eat Right Station’ Certificates
Panagariya, who met with Sarma, members of his cabinet, and senior government officials earlier in the day, shared the details during a press conference.
"The Chief Minister expressed his concern that since the 13th Finance Commission, Assam has experienced a consistent decline in its share of devolution. He highlighted that this trend is linked to lower taxes on petroleum products and liquor in neighbouring states," Panagariya said.
Sarma reportedly pointed out that lower tax rates in neighbouring states are being compensated by the Finance Commission, which in turn results in revenue loss for Assam.
In response, the Assam government proposed implementing different criteria for tax devolution based on the unique conditions of each state. The 15th Finance Commission had allocated 15 per cent of states' shares to Assam, but the state has now suggested reducing this share to 10 per cent to better reflect its financial realities, Panagariya added.
The 16th Finance Commission, led by Panagariya, acknowledged the "merit" in Assam’s recommendations, indicating that the state's proposals on monetary issues were carefully considered.
The Finance Commission is constitutionally tasked with making recommendations on the distribution of tax revenues between the Centre and the states, as well as among individual states.
The 16th FC arrived in Assam on Wednesday, September 26, for a four-day visit aimed at understanding the state's financial situation and discussing potential solutions.
