"If we don't have that, it'll become a regressive tax. Some goods are essential for the poor," the Finance Minister told parliament. To illustrate the need for different slabs, he said, "A BMW and Hawai chappal (flip-flops) can't have the same tax. What are the goods, who uses it, matters. "
The Congress has objected to the slabs, stating that they invalidate the goal of replacing a slew of taxes, which vary from one state to another, with one consolidated tax. Veerappa Moily of the Congress said the slabs and other infirmities mean that the GST reform amounts not the game-changer that the government describes it as, but "baby steps."
The GST rates range from 5 to 28 per cent, with 12 per cent and 18 per cent as standard rates. The new tax also includes a separate central "cess" that will be levied on tobacco products, luxury cars and aerated drinks, charged on top of the 28 per cent tax bracket.
The government, with its large majority in the Lok Sabha, got the proposals cleared today. But the Congress has objected to them being presented as Money Bills, which cannot be changed or rejected by the Upper House or Rajya Sabha, where the government is in a minority. Mr Moily and other Congress leaders say this is a blatant violation of the opposition's right to a say in crucial legislation, and violates the spirit of federalism and stature of states because parties are allocated Rajya Sabha seats depending on the composition of state legislatures. Mr Moily said all Rajya Sabha members should resign in protest against the affront.
The Finance Minister countered that all tax proposals are classified as Money Bills, and that the GST is no exception.