NEW DELHI: Indian industry groups called for early implementation of the goods and services tax, piling pressure on the Congress to support the reform as finance minister Arun Jaitley hinted that decision making in the future could shift to executive action and money bills if legislative activity becomes more difficult.
However, the rollout of this indirect tax reform from April 1 looks bleak, with the current parliament session appearing to be a washout, and the government may have to postpone its implementation. Launching a scathing attack on the opposition for the continuous blockade in the Rajya Sabha, where the GST legislation is stuck, Jaitley said history would not be kind to the “outlaws” of the parliamentary system who are stalling the functioning of democracy by “sheer noise and disturbance,” setting a precedent for opposition parties.
The minister spoke at a meeting on GST organised jointly by the Confederation of Indian Industry, Federation of Indian Chambers of Commerce & Industry, Associated Chambers of Commerce of India, PHD Chamber of Commerce & Industry and Confederation of Indian Traders.
“If by sheer noise and disturbance, session after session of the parliament is not allowed to function, then this is a going to be a precedent for parliament of the future and all opposition in state legislatures,” Jaitley said. He said the government is willing to accept the Congress’ demand for removal of 1% additional tax, brought in at the behest of manufacturing states, and will look at compensating states directly.
However, he questioned the rationale of embedding tariff rates in the bill, saying tax rates could not be cast in stone and the GST council is the authority to take a call on them.
“Those who are responsible for setting this precedent have to realise their role in bringing this unfortunate turning point to Indian democracy and will also find a place in history when we look back at the history of India’s parliamentary democracy,” the minister said. The government has barely a week left to get the legislation passed in the winter session of parliament. The levy will replace multiple indirect taxes with one simple tax and create a boundary-less national market that some say can lift the country’s GDP by as much as 2%. Although the Congress maintains it is not opposed to GST, it has not allowed the Rajya Sabha to function and enable passage of the relevant Constitutional amendment bill.
The Indian industry, which had earlier been criticised for not speaking up in favour of changes in the land acquisition law, backed the finance minister and sought passage of the bill in the winter session. “This conference of trade and industry representatives…unanimously resolved to support GST and urge upon all political parties to pass GST bill in parliament since trade and industry is eagerly awaiting the biggest tax reform in the country, the industry bodies said in a resolution.
“The ongoing delay in implementation of GST is a matter of great concern. If the Constitutional Amendment Bill is not passed in the current winter session, it will be a big disappointment for industry and a roadblock in the development of the country,” said CII president Sumit Mazumder.
Jaitley said the country is entering a phase where “legislative activity” is going to become increasingly “more difficult.”
“If, by these tactics, you become outlaws as far as parliamentary democracies are concerned, then you will make a decision-making process, particularly in relation to legislation, extremely difficult and governments in the future will have to realise decision making has to take place through executive action and through money bills,” he said.
Money bills are largely related to taxation, government spending and matters with financial implications and can be introduced only in the Lok Sabha. The Rajya Sabha cannot amend a money bill passed by the Lok Sabha. The ruling National Democratic Alliance, which came to power in May 2014, has a comfortable majority in the Lok Sabha but is in a minority in the upper house of parliament.
A bill to enable the levy of GST was first introduced in parliament in 2011 and it lapsed with the dissolution of the 15th Lok Sabha. In December 2014, the Constitution (122nd Amendment) Bill, 2014, was introduced in the Lok Sabha. It was passed in May 2015 and referred to a Select Committee of Rajya Sabha.
Taking on the main opposition Congress party, Jaitley said that though there is “lip sympathy” for GST, the support ends with that. Jaitley said the impasse over GST can be resolved provided there is the intention to do so. “But if the intention is that India must not be allowed to grow – it had slowed down when I was in power (and) therefore it should slow down when somebody else is in power – if that is the intention, then I’m afraid we will have to find alternative methods to proceed with this,” he said.
GST, he said, is an idea that will have to be approved tomorrow, if not today, and “we are just going through the agony prior to the passage of the bill.”
Jaitley said India’s growth rate could go up by 1 to 2% with reforms and an improvement in the global economic situation.
“Our potential is significantly more than what we are achieving… India has the right to grow much faster. India has the right to achieve full potential and nobody in India has the right to slow down the process of growth,” the finance minister said. Chief Economic Advisor Arvind Subramanian said GST is much needed.
“When the fiscal outlook is looking challenging, I think India needs a solid tax base for the future to be able to finance expenditure on agriculture and rural, social sectors that the economy so badly needs,” he said, adding that a good and modern GST can help clean up legacy tax issues.