GST Council is now facing new controversy over ‘voting rights’, Read details

Federal indirect tax body, the Goods and Services Tax (GST) Council, is facing a fresh controversy – demand for proportional representation of states instead of the current system of all having the same voting rights.

Senior Bharatiya Janata Party (BJP) leader and former deputy chief minister of Bihar Sushil Kumar Modi on Friday tweeted asking the Congress party to respond to a demand for proportional representation in the Council raised by Tamil Nadu finance minister Palanivel Thiaga Rajan and economist and Congress leader Praveen Chakravarty.

Sushil Kumar Modi, who has extensive experience in GST policymaking as a past member of the Council and the chairman of the Council’s predecessor, the Empowered Committee of State Finance Ministers, said the idea of proportional representation is very divisive in nature.

“Is Congress of the view that “one state one vote “structure in GST is untenable and should be undone?” Modi said in his tweet, referring to an article published in the Indian Express newspaper on 7 June by Rajan and Chakravarty. It pitched for more voting rights for states that contribute more tax revenue to the GST pool.

Rajan and Chakravarty argued that states which contribute more to the GST revenue and are less dependent on fiscal transfers from the Centre can afford to be more sensitive to citizens’ concerns–such as removing GST on covid vaccines–while those more dependent on Centre’s transfers want to maximise GST collections.

“Demand by Congress of proportional representation of voting in the GST Council either as a proportion of the size of a state or by its contribution to the GST pool is very divisive in nature. Is this the official stand of Congress,” Modi said in his tweet, tagging Congress party leader and former finance minister P Chidambaram.

The issue of voting rights comes at a time when the relationship between the Centre and opposition-ruled states have been strained due to the mounting financial burden on governments to deal with the impact of the second wave of the pandemic.

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