GST Victim Of Ego War Between India's 2 Biggest Parties

Published: April 06, 2017 19:29 IST
Seventeen years is a long time. It is also the period taken for GST - the Goods and Services Tax - to move from idea to reality. It was in the year 2000 that Atal Bihari Vajpayee, then the Prime Minister of India, suggested an Empowered Committee to examine the issue of GST. We became familiar with the abbreviation a few years later when P Chidambaram, as Finance Minister, actually mentioned GST in his Budget speech.

Why has it taken 17 years for GST to become a reality? I have often called this the "Go Slow" Tax. When either the BJP or the Congress is in government, it is all set to "Go" for GST. When in opposition, the same party and same political leaders "Slow" GST. It has been the smaller parties in the middle - the SP, the BSP, the JD(U), the NCP, the DMK and us in the Trinamool Congress, among others - that have tried to take a constructive approach to GST. This is not the time to claim credit: we all did it together.

Yet, some contradictions stand out. I give you quotes from the meeting of the Parliamentary Standing Committee on Finance in 2012.

This is from Gujarat: "While the loss of revenue is expected due to removal of cascading effect, unacceptable revenue losses would arise mainly on account of the inability to achieve revenue neutral rates, the loss of CST revenues and the sub-optimal collections from services sector."

Now Madhya Pradesh: "Fiscal health of states is likely to deteriorate because of the substantial tax revenue loss, they will not be able to mobilise additional resources for development as they cannot change the rates structure of the most important tax instrument available to them."

The BJP placed the promise of GST in its manifesto for the 2009 election. This is what it said: "CST will be abolished and GST will be rationalised between 12 and 14 per cent."So why did it oppose the GST Bill when it was introduced in 2011, and why were those objections that I have quoted above made by the then Chief Ministers of Gujarat and Madhya Pradesh?

If I go through the positions taken by the Congress, equally wide discrepancies will emerge between what it said when it was in government till 2014, and what it has said after that. India has paid the price. GST has taken 17 years to achieve because of this needless ego battle between our two biggest parties.

Trinamool has been consistent on GST. It has been clearly mentioned in election manifestos - assembly or Lok Sabha - in 2006, 2009, 2011, 2014 and 2016. We promised to support the idea and promised to support the implementation. Along with backing the Idea and Implementation, we contributed a third I: Insight.

Collaborating with other regional parties, we helped put together a constructive draft for GST that had significant buy-in. For example, the removal of petroleum and tobacco products from the GST regime, and leaving these for states to tax, took away from a "perfect" GST - to quote a Congress MP - but enabled an "acceptable" and "workable" GST.

I served on the Select Committee for GST. We had 22 meetings and debated a gamut of issues. One issue that took much time involved a single word. The draft text read: "The Centre 'may' compensate the states ..." A variety of legal minds insisted there was no real difference between "may" and "shall". My Oxford dictionary told me otherwise. We thought there was a big difference and many of my colleagues agreed. By consensus, we changed "may" to "shall".

A similar issue related to the line that the Centre would compensate the states "up to five years". The Select Committee, after much pushing and shoving, changed this to "for five years". These seemingly minor edits went a long way in building trust and creating a conducive atmosphere.

Two significant meetings of the GST Council were held in Kolkata. The Chairman of the GST Council was Finance Minister Arun Jaitley and the Chairman of the Empowered Committee was Amit Mitra, Finance Minister of Bengal. If you look at the minutes of those meetings, you will find this was when the states reached a consensus on GST, at the Empowered Committee meeting on June 16, 2016. History was made on that day.

How was this done? The Empowered Committee worked hard to sort out pending problems and had significant achievements:

- Keeping small businesses under Rs 20 lakh turnover outside the GST ambit

- Giving coastal states the right to tax economic activities within 12 nautical miles

- States would have the power to administer 90 per cent of assesses, with an annual turnover of up to Rs 1.5 crore. There are 22.71 lakh taxpayers in this category. About 90,000 of them are in Bengal

Then there was the issue of MSMEs - micro, small and medium enterprises. This was a roadblock, but the Empowered Committee found a way around it. As such, within the GST regime, a business entity with turnover of up to Rs 50 lakh can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.

After such sterling and cross-party work, it was disappointing that the GST Bills were brought in as Money Bills, which would in effect bypass the Rajya Sabha.


More on bypassing the Rajya Sabha, including why the Finance Minister wears a football jersey with the number 110.

Derek O'Brien is leader, parliamentary party Trinamool Congress (RS), and Chief National spokesperson of the party.

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

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