GST Panel Gets A New Captain

‘I know what needs to be done’: New GST panel chief Amit Mitra
Being part of the Empowered Committee of State Finance Ministers for the goods and services tax (GST) for five years, West Bengal Finance Minister Amit Mitra is clear about the push that the long-delayed tax reform needs.

Today, after taking over the as the chairman of the GST committee, Dr Mitra knows the enormity of his task, as well as how important it is for the tax to get rolled out.

“A single tax is extremely important for the industry in general and for the micro, small and medium enterprises (MSMEs) in particular,” he told CNBC-TV18’s Shereen Bhan in an interview. “It will boost the country’s GDP growth.”

But while everyone knows what benefits GST may entail, the state FM is also aware of the challenges — “we have to protective of federalism” — and opposition it faces from some opposition parties, such as the Congress.

In the interview, he said it was premature for him to outline what steps he would take to bring about consensus, but pointed out that the groundwork for the GST was already being put in place alongside, even as the central and state governments work to bring about legislative success.

Below is the transcript of Amit Mitra’s interview with CNBC-TV18’s Shereen Bhan.

Q: It is a challenging time for you to takeover as the chairperson of the empowered panel on the Goods and Services Tax (GST). The GST continues to be in limbo. There is no consensus yet. The Congress party is not onboard, are you at all hopeful of the GST making its way through this session of parliament?

A: It is a great honour and humbling task that the finance ministers across states have unanimously decided to put on my shoulders announced by the union Finance Minister (FM) himself. So, I am somewhat humbled by this.

Having said that it is important that the next empowered committee meeting will go into these details. However having being in the empowered committee for the last five years I am aware among my finance minister colleagues, senior colleagues that there is a wide consensus across parties and across governments that a single tax would be extremely important for the micro, tiny, small and medium industry businesses of India in particular aside from the large because their transactions costs will come down and we after all are elected representatives of the people. These are the companies that employ over 90 percent of the working people of India. If they benefit from a single tax rather than 20 taxes which they are unable to handle it will not only increase the national Gross Domestic Product (GDP) but more importantly people do not understand there is a synergy between the states GDP – Gross State Domestic Product (GSDP) as we call it and the centre which cumulates into the central growth.

So, my submission is from my five years in empowered  committee, my sense is that there is inprinciple agreement. In fact as early as 2009 the Trinamool Congress (TMC) among other parties put in the support inprinciple for GST because over 90 percent working people whom small businesses employ.

So, I am hopeful that these are political economy processes not economics only but good for a much broader group of people in the country due to which there is an inprinciple agreement.

Of course there could be differences, for example, states interests would have to be protected, that is something on which there is a wide consensus. Federalism in a federal polity like us have to be protected. So, how does one make sure that that happens is a challenge for both the centre and the states. So, key point is that in the coming weeks when the empowered committee meets it would be too premature for me to assume what will happen. However there is no doubt that the issue is something that positively impacts  large number of people, a huge proportion of the working people in the country. Question is to look at any differences.

I have considered myself always as a team player in my life. I work with people, I am empathetic to other people’s views. When they have given me this responsibility, I will try to carry all my senior colleagues in the empowered committee towards the fructification of a single tax in India or near single tax in India without sacrificing the interest of states, interest of federalism and with it in tandem the interest of the national process.

Q: Do you believe  that April 1 2017 timeline for a rollout of the GST could perhaps be realistic, could be feasible because April 1 2016 is clearly over and done with?

A: When there is a will there is a way, when there is a consensus, when there is broad agreement across the spectrum, things can happen. We have to see in the next empowered committee what is the kind of consensus we are able to evolve. Once that happens the next step would be to take it to specific constitutional process underway with the relevant amendments and see whether again in the floor of the Rajya Sabha that consensus is carried out. As you know our party is very strongly supportive of this, so has it been in select committee and so have many parties.

Once that process of Rajya Sabha and Lok Sabha together are over and it becomes a done deal as far as the legislative process is concerned then the mechanics is what you are alluding to, whether that can be carried out at post this. One must also know that the information technological pathways for GST have been on for the last one and half years. Officials have been meeting, looking at software, on shake hand of software, there are issues with the centre and state will both be inspecting documents, all these things of technicalities of implementation on the ground have been going on among the officials of the states for the last one and half years.

So, it is not that you pass a legislation with the requisite amendments successfully and then you start the process. The process in technical terms have been on. I have been on the empowered committee for the last five years, officials are working this out. So, one has to go step by step. First the empowered committee a consensus is drawn, differences ironed out and then comes automatically the moving that by the union government into the parliamentary process. As soon as that is over and successfully  if it is done the technicalities I don’t think will become a big hurdle because I would say 70 percent or 80 percent of operationalising a law in terms of  particularly the huge It process that it will require is already on.

So, my submission is let us take it step at a time. It is too premature for me to predict.

I am honoured to have taken over, officially asked to take over today.

Q: When is the next meeting of the empowered committee? Also on the Congress party’s key demands and they have of course raised several contentious issues but key one which is the capping of the rate in the bill itself as part of the legislation, where do you stand on that?

A: It is too premature for me to make a comment on this because this is a matter of consensus. At the empowered committee there are Congress finance ministers, many of them, there are other party finance ministers, it will be our joint and collective task to try and see how we work through those processes.

There may be other differences of opinion as well from other parties. So, key to this is that empowered committee meets, works through this and works with each other and find solutions which are acceptable to all because this is political economy, it is not just economics. You have to carry every state by and large, you have to carry all political parties and empowered committee is represented by all of them. Anybody who is elected finance member of a state is a member of the empowered committee, cuts across almost all parties.

So, my submission is today let us concentrate on the step by step and I am not in a position to pre-empt anything because I would like to see everybody on the same page. I respect everyone of them so that I do not say something which is something that the empowered committee will not be privy to. Let them take the lead.


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