Why south Indian states have started a tax movement| #southtaxmovement
The News Minute・1 minute read
Southern states like Kerala, Karnataka, and Tamil Nadu are leading the South Tax Movement due to unfair tax revenue distribution, with Uttar Pradesh receiving significantly more funds than all five southern states combined. The Finance Commission's tax-sharing formula, linked to population control efforts, has exacerbated the unequal distribution, leading to increased dependence on the Union government and impacting states' autonomy in spending.
Insights
- Southern states like Kerala, Karnataka, and Tamil Nadu are leading the South Tax Movement due to unfair tax revenue distribution, with Uttar Pradesh receiving more than all five southern states combined.
- The Finance Commission's tax-sharing formula impacts how tax revenue is distributed among states, with disparities linked to population control efforts, affecting states like Kerala and Tamil Nadu.
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Recent questions
Why are southern states protesting against the Union government?
Unfair tax revenue distribution and allocation disparities.
How does the Finance Commission impact tax revenue distribution?
Determines tax-sharing formula among states.
What is the impact of the GST on fiscal federalism?
Eroded fiscal autonomy and increased dependence on Union government.
Why do states like Kerala and Tamil Nadu feel penalized in tax devolution?
Linked to population control efforts and disparities in tax revenue distribution.
How has the Union government's control over revenue sources affected states' autonomy?
Unequal distribution of funds and limited autonomy in spending.
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Summary
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Southern States Lead Tax Movement Against Union
- Kerala, Karnataka, and Tamil Nadu are leading the South Tax Movement against the Union government, citing unfair distribution of tax revenue.
- In the interim budget, Uttar Pradesh alone receives significantly more allocation than all five southern states combined.
- Southern states like Karnataka contribute a large sum in taxes but receive much less back compared to states like Bihar and Uttar Pradesh.
- The Finance Commission determines the tax-sharing formula, impacting how tax revenue is distributed among states.
- The disparity in tax devolution is linked to population control efforts, with states like Kerala and Tamil Nadu feeling penalized.
- Maharashtra, despite being the richest state, has not lost much in allocations, unlike the southern states.
- The GST has further eroded fiscal federalism, with states facing shortfalls in compensation and increased dependence on the Union government.
- The Union government's control over revenue sources and discretionary grants has led to unequal distribution of funds, affecting states' autonomy in spending.
