Go ahead with central GST, states can follow

By Yashwant Sinha

The GST is not the product of the Congress’ imagination. It was conceived during the NDA 1 regime. While all the basic work relating to the replacement of the state sales tax with VAT was done during the NDA period, it was implemented by UPA 1. Similarly, while the idea of GST was mooted during the NDA regime, the work relating to drafting the legislation was done during the UPA rule. It now remains for the NDA to get the legislation passed and implement GST.

The GST Const itut ional Amendment Bill was introduced in Lok Sabha on March 22, 2011, a full seven years after the UPA assumed power. The Speaker referred it to the standing committee on finance a week later. After a detailed examination, the committee submitted its report on August 7, 2013. The UPA government did not bring it back to Parliament either in the monsoon or the winter session of 2013.

Some Congress spokespersons often accuse the BJP for delaying the GST. This allegation is baseless. The committee started work on the Bill in earnest in May 2011. First, the finance ministry wanted the committee to return various other Bills urgently. Second, as the report of the committee mentions, the committee was keen to submit its report “in the monsoon session of Parliament in 2012”.

But the ministry delayed submitting its replies to the queries of committee members and submitted its interim replies only in August 2012.

The ministry promised to submit its final views by the end of January 2013, after it had received the reports of the committees on “GST design and CST compensation issues.” Subsequently, the committee was given to understand that the government would take a final view only after receiving the committee report.

The committee finally gave its report “so that they are not blamed for stalling the Bill”. Unfortunately that is exactly what the Congress is doing today. Legislations are supposed to be introduced in Parliament after due and careful consideration by the government. The observations quoted above were unanimously approved by the committee, which had a majority of UPA members.

Despite the reservations of the BJP governments of Gujarat and Madhya Pradesh to the Constitutional Amendment Bill as drafted, the committee supported the Bill and made useful recommendations to improve it. It is wrong to presume that the UPA government was ever serious about the passage of the Bill. Otherwise, it would not have dragged its feet on every occasion.

The earnestness with which the present government is pursuing this Bill is refreshing, especially since the BJP was also largely indifferent to it when we were in Opposition. GST is a good concept. It will, no doubt, clean up the remaining cobwebs on the indirect taxation side and unite the country into one common market. But it isn’t a panacea for all our problems.

What is the alternative available to the government if the Opposition obstruct the Bill’s passage in the Rajya Sabha? Reach out to them at the highest level — and not through the media. Accommodate their reasonable demands and give up being rigid on issues and dates.

If this does not work, then go ahead with central GST in the next Budget. Let us not forget that central VAT preceded state VAT by many years. We may continue to encourage the states to replace the state VAT with a state GST. At some point in a more conducive political atmosphere, the two could be brought together to form an all-India GST.

(The writer is a former Union Finance minister.)

DISCLAIMER : Views expressed above are the author’s own.
Source: Economic Times

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