India is one month away from the next parliamentary session and more than six months away from the next assembly election.
For politicians focused on governance and policy-making, it’s time to get serious. As a member of the Trinamool Congress, a party that has been a strong and consistent backer of a fair and effective Goods and Services Tax (GST) regime, believing this will be good for West Bengal and good for the country, I am again hopeful that the GST legislation will be passed by the Rajya Sabha.
Unfortunately, before 2014, it was the BJP that jeopardised the GST Bill by raising many objections and not working towards a solution. Now the Congress is paying back the BJP by raising bizarre points about the GST legislation, some of which it had not raised even while it was in government. For two years, the drama has continued. GST was supposed to be introduced by April 1, 2015, but now, at the earliest, we can hope for an introduction by April 1, 2017. The Monsoon Session, with the Rajya Sabha numbers having changed somewhat after the recent elections, is the last chance.
How hypocritical some parties are when it comes to GST (or other laws and policies) is clear from the CPI(M) response. The Communists in Delhi, playing second fiddle to the Congress, are opposing GST and joining the Congress in refusing to do business with the rest of the Rajya Sabha. The Communist government in Kerala, alive to the exigencies of governance, is supporting GST. When he visited Delhi recently, the Kerala Finance Minister, a CPI(M) man, announced he was in favour of the GST law passing in Parliament. Maybe this is what the CPI(M) calls dialectics.
Why is GST important for the economy? Today, there are eight or nine separate taxes and levies imposed on goods and services by state governments and the Union government. Excise duty, additional customs duty, service tax, value-added tax, sales tax, entertainment tax, entry tax, luxury tax…This places an excessive burden of indirect taxes on common people. Also, the tax system has been designed so that end-consumers and market stakeholders are taxed at multiple stages (at least twice).
GST aims to rationalise this maddening tax structure. In the spirit of cooperative federalism, it will subsume all central and state taxes on goods and services into one tax and a Revenue Neutral Rate. For states, tax administration will become streamlined and more efficient. This will take forward the pre-GST tax streamlining that the Trinamool government has already done in West Bengal. Once fully implemented, GST could expand India’s GDP by one to 1.5 per cent.
Trinamool has been consistent in supporting GST. Our election manifestos of 2009, 2011, 2014 and 2016 have underlined the need for this tax reform. Our MPs have spoken in favour of it in parliament, and offered constructive suggestions in the Empowered Committee and Sub-Committees. In 2015, we urged some changes in the interest of state governments. We asked that states be compensated for revenue losses for at least five years, and petroleum and petroleum products be exempted from GST for a period of five years as they constituted a major revenue source for states. These recommendations were accepted.
The GST regime presents a challenge of dual control – scrutiny, audit, assessment, and inquiry by state officials as well as central officials. This will be time-consuming and increase chances of corruption. Trinamool suggested small dealers, with a turnover below Rs. 1.5 crore a year, be exempted from dual control. Finally, the Empowered Committee of State Finance Ministers, headed by my colleague Amit Mitra, the Finance Minister of West Bengal, accepted that small dealers be kept out.
The idea of GST was proposed in 2006. Over 10 years, it has slowly evolved into a framework shaped by political and centre-state consensus. Now, to pass muster, we need to move from “cooperative” federalism to “operative” federalism – and get GST operational. The Monsoon Session is our test.
I only pray the Congress sees reason. Its opposition, even as individual party MPs and Chief Minister have privately spoken of the urgent need for GST, is irresponsible and extremely disappointing. As the rains come down on India, hopefully tempers will cool. And as I wrote once earlier, my GST speech has been ready for quite some time now. I look forward to getting the reason and the opportunity to make it in in July 2016!
Derek O’Brien is leader, Parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party.
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