After calling the Venkaiah Naidu meeting with Sonia Gandhi an attempt to submerge detailing with optics, Congress on Friday blamed the BJP for creating a “false smokescreen” on the goods and services tax bill (GST). Congress insists that it is the RSS and Swadeshi Jagran Manch that have been holding up the legislation which is widely seen as an acid test for Prime Minister Narendra Modi’s liberalizing credentials.
The Indian Express reports that the party whipped out speeches of Gujarat Finance Minister Saurabh Patel before the Empowered Committee of Finance Ministers, which looked into the GST, to argue that the Narendra Modi-led Gujarat government had stonewalled the legislation.
“Deception, deceit and double-speak have become hallmarks of the Modi government vis-à-vis implementation of GST as also other economic reforms. The BJP government, including Prime Minister and the Finance Minister, has been putting up a false smokescreen by accusing Congress of obstructing GST, while the real truth is that GST stands consistently red-flagged for last nine years by RSS and Swadeshi Jagran Manch,” Congress spokesperson Shaktisinh Gohil said, reports The Indian Express.
“Modi and the BJP government are now camouflaging paralysis of governance and failure of leadership over the last 19 months to misguide people by stating that current day grave economic crisis as also deflation of economy is happening because of non-passage of the GST,” Gohil said. “The government has no interest in passing the GST Bill. It is interested only in doing politics on GST,” he said.
“Butter up opponents, Mr Modi”
In its latest issue, the Economist argues that Modi will do well to dump the NRI crowd for a bit and deal with issues closer home. “If Modi is to secure any economic legacy, he may now have to spend more time on the art of buttering up opponents at home rather than fellow leaders abroad,” says the London based newspaper in its GST story titled: One country but no single market.
Congress rebuffs suggestions of breakthrough
The Congress party on Thursday rebuffed suggestions of a breakthrough on a landmark tax reform, hours after the government said it had accepted the demands set by the main opposition party to back the measure.
The proposed goods and services tax (GST), India’s biggest revenue shake-up since independence in 1947, seeks to replace a slew of federal and state levies, transforming the nation of 1.2 billion people into a customs union.
Supporters say the new sales tax will add up to two percentage points to the South Asian nation’s economic growth.
The Congress party, the original author of the tax reform, has opposed what it calls the “flawed” version now before parliament, where it has been able to block a key constitutional enabling amendment in the Rajya Sabha.
How does the existing system work?
Taxes production more than consumption
Subsidises importers, hurts domestic producers.
Trade between states is taxed, through a central sales tax of 2%.
Some states impose duties on products entering from elsewhere in India.
What does Chief Economic Advisor’s report say?
Scrap the central sales tax and set two bands for the GST – a standard rate of 17-18% and a lower 12% rate for sensitive goods.
Alcohol as well as property transactions should be subject to the GST. In return, states could levy “sin taxes” on things like alcohol and tobacco of up to 40%.
Congress remains combative
“The government is using optics of meetings and is not serious about GST,” senior Congress leader Kapil Sibal told reporters.
His comments came after Parliamentary Affairs Minister Venkaiah Naidu said the government had agreed to accept the opposition party’s demands.
Naidu also said the government was willing to bring forward the next parliament session to pass the proposed goods and services tax (GST) bill if Congress backed the measure.
The minister met Congress chief Sonia Gandhi on Thursday to convey the government’s decision. Gandhi did not assure him of her party’s support, however.
“Sonia said they (Congress) will discuss among themselves and take a final decision,” Naidu said.
“We had invited Soniaji and Manmohan Singhji and discussed with them the GST and other bills. In the same context, as the Parliamentary Affairs Minister of the government, I met the Congress president and recalled to her that as per the discussion held earlier, the Congress should finalise its stand. They had raised some issues, which were answered by Finance Minister Arun Jaitley. Since the government had already spoken to Leader of Opposition in the Rajya Sabha Ghulam Nabi Azad and the Deputy Leader of the Congress in the House Anand Sharma in this regard, I reminded her that a quick decision should be taken and we should move forward immediately on the GST and the real estate bill,” Venkaiah Naidu said.
But Sibal said the party was still waiting for written proposals from the government.
Congress wants the government to cap the GST rate at less than 20 percent, scrap a proposed state levy and create an independent mechanism to resolve disputes on revenue sharing between states.
The political slugfest between the two sides has ensured that Finance Minister Arun Jaitley’s self-imposed deadline of April 1 for the GST’s launch will be missed.
While Jaitley has yet to set a new date for the rollout, aides say passage of the constitutional amendment bill in February’s budget session of parliament would allow them to implement it by October.
Yet even that deadline, which would fall in the middle of the tax year, appears optimistic, say economists.
“There is still a substantive legislative process that has to be completed,” said Aditi Nayar, an economist at ICRA, the Indian arm of rating agency Moody’s.