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Re: state/center division of powers, was:Shut down Excise

prabhu.guptara@ny.ubs.com wrote:

>      . . . let those who argue for greater decentralisation of the
>      tax structure be aware that:
>      1.  they will thereby be weakening an already weakened centre, and
>      2.  they will exacerbate existing income differentials between
>      regions/ localities (and that this will lead to greater desire for
>      some regions (very rich and very poor) to separate from India).

I agree that 1. it not necessaroly a bad thing-IMO the center still has
too much power.

Regarding 2. I think we need to come up with some kind of guideline for
allocation of resources. Something like- each state must get back at
least X% of the tax revenue it generates in central spending averaged
over Y year intervals. The calculation can exclude border defence
military spending though that may not be needed since mlitary production
is located in non-border states.

Also states and municipalities will have a right to legislate and
collect taxes independently- with clear guidelines to prevent
restriction of interstate travel and commerce.


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