The Modi government’s Goods and Services Tax (GST) is “very, very imperfect” and cannot be called “one nation, one tax” as it has seven or more rates, senior Congress leader P Chidambaram said here today.
The Congress will press for a reduction in tax rates and demand a cap of 18 per cent, besides seeking to bring petroleum, electricity and real estate under the new tax regime, the former finance minister told reporters.
“This is a very, very imperfect GST. This is not the GST which we (the UPA) had envisaged,” he said.
What the government had implemented, he said, was a GST with at least seven rates.
“It is a mockery of the GST. When we have rates such as 0.25, 3, 5, 12, 18, 28 and 40, and possibly more because of the discretion vested with state governments, how can we call this a ‘one nation, one tax’ regime,” he wondered.
Asked if the issue would be raised in Parliament, he said, “Of course, this is a preview”.
Chidambaram said the Congress would continue to watch the roll out of the GST and “articulate the fears and grievances” of businesses and consumers.
“We will keep vigil over the possible misuse of the draconian powers given to the anti-profiteering authority. We will highlight the elements of the true GST,” he said.
The senior leader said his party would hold meetings across the country to highlight that the Congress was the “original proponent” of the GST and campaign for a “true GST”.
He noted that authorities and businesses were “unprepared or under-prepared” for the tax regime and said its launch should have been deferred by two months, while the GSTN (goods and services tax network) should have been put on a trial run.
“I suggested a trial run for two months and effectively we should have a roll out of GST from September 1,” he said.
He said the government should have tried to make it as perfect a GST as possible as this was “very imperfect”.
“Yashwant Sinha, who appointed the empowered committee, has said this is not the GST which was envisaged. Neither Sinha, nor I nor my successor Pranab Mukherjee envisaged this.
This is not the GST that Manmohan Singh envisaged,” he said.
Taking a dig at the government on demonetisation, the former finance minister said the note ban had “solved all our problems, as it abolished black money, removed fake currency, and has put an end to corruption. Demonetisation is God’s gift to India”.
Asked if the GST would be inflationary, he said experts feared that in the short term it would be so, but his party would welcome any measure taken to contain inflation.
On GST’s effect on GDP, he said a Niti Ayog member had said there was no direct correlation between the two.
“Therefore, to suggest that the moment you roll out GST, GDP will go up by an additional 2 per cent is purely speculative,” he said.
On whether the country could have one tax on luxury goods as well as essential items, the former finance minister said it meant the government did not believe in the GST.
Chidambaram said by definition, the GST was a single tax and if the government thought the country was not yet ready for it, “do not have it and do not call it the GST”.
“For Indian conditions, there could be a standard tax and standard minus, standard plus. When you have seven or even 10 tax rates, don’t call it the GST. Call it your Indian indirect tax system, don’t call it the GST,” he said.
On Finance Minister Arun Jaitley’s remark that every reform was disruptive, he said, “Every reform will be disruptive, but you should have prepared better. You should have allowed the people to prepare better.”
On the issue of government allowing stickers to be put on existing stocks without erasing the original price, he said this was a “desperate” measure.
“The government is trying to make the best of a bad arrangement. The measure is unprepared or under-prepared,” he said.
The former FM said the government should have had a trial run for about two months and deferred the actual roll out till September 1. It should have made it clear that existing stocks had to be cleared in these two months.
“There are ways and means that this could be addressed. I think they are now trying to make the best of a bad situation,” he said.
Chidambaram also said the Centre should have impressed upon the Jammu and Kashmir governments that without diluting Article 370, it was possible to implement GST in the state.
On Tamil Nadu passing an ordinance to impose an additional 30 per cent tax on cinema tickets, he said if states were allowed to exercise their discretion, there would be so many rates that “we have the danger of unravelling the GST”.