BENGALURU: Karnataka Chief Minister Siddaramaiah on Friday urged the 16th Finance Commission in its forthcoming recommendation to the Centre to ensure that no state, including Karnataka, faces injustice in the devolution of taxes, and the cess and surcharges should be brought under the divisible pool.

"The Centre collects cess and surcharge on various commodities, but keeps the entire thing for itself as it does not come under devolution of taxes. We suggested the cess surcharge should not exceed 5 percent, and if it does should be shared with states.

During 2024, Rs 5,41,709 crore was collected, and all the states incurred losses to the tune of Rs 2,22,101 crore, with Karnataka alone losing Rs 8,084 crore. We don't have any objection to collecting, but if you (Centre) collect more than 5 percent, it should be in the divisible pool", he told reporters after his meeting with the chairman of the 16th Finance Commission Dr. Arvind Panagariya, and members in New Delhi.

"The Centre's discretionary grants should not exceed 0.3 per cent", the CM suggested to the 16th FC.

"Karnataka annually contributes Rs 4.5 lakh crore in taxes to the Centre but getting only 15 paise against 1 rupee in devolution of taxes; this injustice should not happen in the 16th FC recommendation. Because our tax share, which was 4.713 in the 14th FC recommendation, has been reduced to 3.647 per cent in tax devolution cut by 1.1 per cent, causing Rs 68,275 crore loss in five years(2021-2026)", the Chief Minister explained.

Siddaramaiah said that among the 31 districts, six in Kalyan Karnataka region have per capita income less than the national average and are on par with Rajasthan, Odisha and West Bengal.

The 15th FC had recommended the Centre to give special grants of Rs 5,495 crore to Karnataka, Telangana and Mizoram, but the Centre refused, he alleged. The state-specific grants to the tune of Rs 11,495 crore against peripheral ring road and water bodies were also denied, he added. The CM said since Bengaluru is growing fast, the special grants (Rs 1.15 lakh crore) are crucial. Seven Kalyana Karnataka districts and the Malnad region in Western Ghats, which face floods and landslides too need funds, he said.

"We do not say backward states should not be given special grants, but it should be rationalized. Is it justifiable and enough for Karnataka to receive 15 paise against 1 rupee collected and given to the Centre?" the CM questioned.

He felt that the meeting, which lasted for 1 hour and 15 minutes, was cordial with the chairman of the 16th FC and its members were very receptive to Karnataka's proposals.

Replying to a query on skipping the Niti Aayog meeting recently, he said that he was busy with the pre-scheduled programmes.

Chief Minister's Economic Advisor Basavaraj Rayareddy, Chief Secretary Dr Shalini Rajneesh, Principal Secretary of the Finance Department Ritesh Kumar Singh, Chief Minister's Secretary Anjum Parvez, and Finance Secretary Dr PC Jaffer also attended the meeting.