Finance Minister Arun Jaitley today blamed the inability of previous UPA governments to assuage the apprehensions of manufacturing states about the potential loss of revenue due to implementation of GST that delayed the passage of the constitutional amendment bill to introduce a nation wide common goods and services tax.
Jaitley said manufacturing states like Tamil Nadu, Gujarat, Karnataka and Maharashtra feared loss of revenue as GST was a destination based tax, under which the taxes would be collected at the point of consumption.
Finance Minister said the Prime Minister Narendra Modi was clear from the day one that the country must be integrated economically and he received full backing of the Prime Minister in convincing the states to implement a common goods and services tax.
Talking about the steps taken by the government to convince the manufacturing states Jaitley said: “When we informed the manufacturing states that the centre would fully compensate them for five years in case of any revenue loss arising out due to implementation of GST they asked us whether we would include this assurance in the constitutional amendment bill?”
Jaitley said all 29 states and 6 union territories agreed to implement the GST once the central government assured them that its promise to fully compensate any state for the next five years would be guaranteed in the constitutional amendment.
Finance Minister also appreciated Jammu & Kashmir chief minister Mehbooba Mufti for implementing the GST in the state as unlike other states it required a special resolution by the state assembly which was approved on Wednesday amid heated debate.
Talking about the virtues of GST under which businesses get credit for the taxes paid earlier, finance minister said that it was the power of economics that convinced the consumers of Jammu & Kashmir that the state’s economic merger with India was in their interest.
Finance Minister also criticised the Congress for continuously changing its stand on GST as the principal opposition party did not participate in the midnight roll out of GST from the Parliament’s central hall.
He said the idea of GST was mooted during the tenure of Atal Bihari Vajpayee government which was later adopted by the two successive UPA governments.