September 5, 2025

Get ready for some fiery talk! TMC’s Rajya Sabha leader Derek O’Brien is all fired up against the Centre’s cess collection. On Friday, he said that cess is "slitting the throat of federalism." What’s cess? It’s an extra tax that goes 100% to the Union government—states don’t get a single rupee! O’Brien revealed that in 2012, cess was only 7% of Union tax revenue. But by 2025, it’s expected to balloon to about 20%! That’s a huge jump. He also dropped a bombshell—since 2019, a whopping Rs 5.7 lakh crore of cess and surcharge money is just lying unused. States are feeling the pinch because the "divisible pool" of tax revenue shared with them is shrinking. In fact, 22 states, including many BJP-ruled ones, protested this cut and asked the 16th Finance Commission to bump up their tax share from 41% to 50%. O’Brien showed numbers that tell a disturbing story. Between 2011 and 2021, the divisible pool fell from 89% to 79% of gross tax revenue. This is despite a 10% increase recommended by the 14th Finance Commission! If that’s not enough, cess collections between 2015 and 2024 have jumped by a whopping 462% — that’s over Rs 2 lakh crore. Remember, cess is not shared fully with states and is extra over the existing taxes. The divisible pool, on the other hand, is the money split between Centre and states – but cess and surcharges are generally kept out. O’Brien also cited former West Bengal Finance Minister Amit Mitra, agreeing that the new GST rationalisation is a step forward if the common people truly benefit. But he warned, "an anti-profiteering committee that ensured the lower GST would be passed on to consumers has been discontinued." What about states’ losses? Eleven GST Council ministers had asked for compensation. Sadly, their voices were "muffled." The revenue secretary estimated a Rs 48,000 crore loss but O’Brien believes the real loss could easily cross Rs 1 lakh crore counting the entire supply chain. Digging deeper, O’Brien shared that as a member of the Parliamentary Select Committee in 2015, the recommendation was to keep GST under 18% and avoid many different tax rates. "Now, done. Better late than never," he said. Good news though! The GST Council recently agreed on a two-tier GST rate – 5% and 18% – starting September 22. Despite worries about revenue, states united and decided to help the common people with lower tax rates. The tax drama continues, but one thing is clear—the battle for fair shares and federal balance is heating up!

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Tags: Derek o'brien, Tmc, Cess, Federalism, Tax revenue, Gst rationalisation,