Lucknow, June 4: Chairman of the 16th Finance Commission Arvind Panagariya held a meeting here on Wednesday and discussed the division of central taxes between the Center and the states.
Chairman of the 16th Finance Commission Arvind Panagariya is on a tour of Uttar Pradesh today. The division of central taxes between the Center and the states was discussed in the meeting of the Finance Commission. After this, in a press conference organized in Lok Bhavan, Panagariya said that the share of the states in the taxes collected by the Central Government can be increased to some extent, but it cannot be increased as much as the states demand.
Panagariya told that at present the Central Government keeps 59 percent of its tax revenue with itself. It gives 41 percent to the states. Along with Uttar Pradesh, many states have demanded to raise share from 41 to 50 percent. This 41 percent is directly distributed to all the states.
Arvind Panagariya told reporters that the main function of the Finance Commission is to prepare a proposal for the division of taxes between the Center and the states. The prepared proposal is presented before the President of India.
He said that the proposals of the Commission have been accepted by the President. Apart from this, the Finance Commission also prepares a proposal for budget allocation for local bodies and panchayats, which is a part of the 72nd Constitutional Amendment. The Commission also proposes budget for disaster management and relief work.
Panagariya said that the members of the Commission visit every state and assess the economic and social needs there. Budget allocation for local bodies and panchayats was discussed especially in Uttar Pradesh.
He also mentioned that Uttar Pradesh ranks first in the country in GST collection. This reflects the economic strength of the state.
Finance Commission Chairman Panagariya said that many criteria are taken into account in the distribution of taxes, such as population, area, forest and environment, income distance, and demographic performance, Uttar Pradesh has made some special proposals. The state has demanded to reduce the share on the basis of area from 15 to 10 percent and the share for forest and environment from 10 to 5 percent. Also, a 10 percent share in tax collection and 7.5 percent share in demography has been proposed.
Arvind Panagariya said that the Finance Commission is seriously considering these proposals. Their aim is to ensure balanced and fair tax sharing between the Center and the states. Keeping in mind the demands of a big state like Uttar Pradesh, the commission will prepare its recommendations, which will also strengthen local bodies and disaster management.