Tax-Sharing

IN his article, 'Towards an Alternative System of Tax-Sharing in India' (March 20-27), S Gurumurthi has argued for an alternative approach to tax-devolution on three grounds: (i) promoting stability in fiscal federalism by keeping tax devolution to states as a fixed percentage at 33 per cent of gross tax revenue (GTR), for a minimum period of 15 20 years, by a constitutional amendment; (ii) exploiting the dormant potential of Articles 268 and 269 of the Constitution under which levy of taxes is only by central government but the proceeds go wholly to the states; this is to be done by including the proceeds from taxes under these articles in the GTR of the centre, thereby encouraging the central government to increase the levies under these heads; (in) on grounds of equity, the alternative system will do bet ter as a result of inclusion of presently non-shareable taxes (customs duties, cor poration tax, surcharge on income-tax) in the divisible pool of central tax revenue. It is, however, open to doubt, whether these three objectives will actually be attained by implementing the alternative system.