CHENNAI: Chief Minister M. Karunanidhi on Friday presented a memorandum to Prime Minister Manmohan Singh seeking financial assistance and waiver for many schemes. He also demanded full compensation for implementation of Value Added Taxation in the State.

In his 15-page memorandum, which was released here late on Friday, Mr. Karunanidhi said the implementation of VAT would result in revenue loss of Rs. 2600 crore. Under the present scheme of compensation, the Centre would provide only 75 per cent in the first three months (January 2007 to March 2007), and 50 per cent from April 2007 to March 2008. He had already written to the Prime Minister and the Union Finance Minister to consider the calendar year 2007 as the first year of VAT to receive 100 per cent compensation.

"This Government again reiterates its request that Tamil Nadu should be given the compensation for loss of revenue at the rate of 100 per cent for the calendar year 2007, 75 per cent for the calendar year 2008 and 50 per cent for the calendar year 2009. There may be an apprehension that such a formula could cause a large burden to the Union if extended to other States which also implemented VAT only in 2006. However, most of the other late entrants are not as industrialised as Tamil Nadu and hence are unlikely to suffer revenue loss... . Thus they are not likely to be eligible for any compensation. Therefore, there will not be any significant outflow for the Union even if the same compensation formula is extended to them.

"It is also to be noted that the State will suffer greater stress on the revenue side in financial year 2007-2008 and coming years because of the proposal of the Government of India to phase out the Central Sales Tax with effect from April 2007." The State will lose revenue of the order of Rs.1250 crore... in 2007-2008 on this account," in addition to the loss due to the implementation of VAT," he said.

Development of Colachel Port, Central assistance for establishment for zero discharge reverse osmosis plants for tanneries, dyeing and bleaching units, Central assistance for desalination project, excise and customs exemption for free colour television scheme are among the other demands.

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