Karnataka CM Siddaramaiah criticises Swachh Bharat cess

BENGALURU:Chief minister Siddaramaiah has criticised the Swachh Bharat cess imposed by the Centre on November 15, 2014 on all services, which has effectively raised the peak rate of tax to 14.5 from 14%.

Industry bodies and tax analysts have said the taxation is inefficient fiscal management and criticised the new cess for lack of transparency. Siddaramaiah told ET, “Our committee did not recommend this cess on all services. The BJP government in the Centre talks of ease of doing business, then introduces such a cess in the middle of the fiscal year. Such contradictions are always there in a BJP government." He pointed out that the Swachh Bharat programme was actually just a renamed central government programme that the UPA used to called Nirmal Bharat.

S Sampath Raman, president of the Federation of Karnataka Chamber of Commerce and Industry, said that unlike VAT, the Swachh Bharat cess did not pass on the tax-paid credit through manufacturers, retailers and customers, which resulted in multiple taxation. “The PM and the finance minister talk of the country gaining eight ranks in the ease of doing business, but it is a hoax. Nothing has changed at the ground level. Introducing a tax like this mid-year, which has not even been debated and passed by Parliament, is objectionable," he told ET.

ET VIEW

Remove The Cess, Adopt GST

The Karnataka Chief Minister has a valid point. The Constitution assigns states the task of public health and sanitation. But states do not get a share of the revenue from the Swach Bharat cess. This goes against the spirit of cooperative federalism. The best way to raise resources is to adopt a nationwide goods and services tax. Cesses must be subsumed in GST which has set offs for all taxes paid on inputs. All states must come on board too.