Cess slits throat of Federalism, says TMC’s Derek O’Brien
The Statesman | 6 September 2025“In all the hoopla about GST, the four-letter word which is slitting the throat of federalism is CESS,” O’Brien said, claiming: “Funds collected as cess go 100% to the Union government. Not a rupee is shared with the State governments.”
O’Brien pointed out several issues with the cess system, including that “in 2012, cess formed 7% of the Union government’s total tax revenues, which has increased to an estimated 20% in 2025.”
He further asserted, “Rs 5.7 lakh crore of cess and surcharge has been lying unutilized since 2019,” while “the divisible pool has shrunk from 89% of gross tax revenue in 2011 to 79% in 2021, despite a 10% increase in tax devolution to states.” O’Brien also asserted that between 2015 and 2024, cess has increased by 462 percent (over Rs 2 lakh crore).
He said that twenty-two states, including some ruled by the BJP, have protested against the shrinking divisible pool and requested a larger share of tax collections, from 41 percent to 50 percent.
“Dr. Amit Mitra, economist and former Chairman of the Empowered Committee of State Finance Ministers on GST, emphasized the need for GST rationalization to benefit common people and ensure state compensation,” he said.
