Shifting the GST goalpost – The Hindu Editorial with vocab October 21, 2016
The
outcomes of the latest meeting of the Council tasked with steering the Goods and Services Tax regime are worrying. For one, it leaves the Centre hard-pressed to meet its intended
deadline for the new indirect tax regime, April 1, 2017. Finance Minister Arun
Jaitley had set a November 22 target to resolve all operational issues with
State representatives in the Council so that the rates and implementation modalities could be codified into law and passed by
Parliament in the winter session. When it met for the first time in late
September, things appeared to be on track, with the Council agreeing almost unanimously on technicalities such as
the turnover thresholds for firms to be covered under the GST and the division
of administrative control over tax assessees between the Centre and the States.
A time-bound road map to finalise remaining details, such as the tax rates,
compensation for States in case of revenue loss under the new system, as well
as the legislative actions required in Parliament and the State Assemblies, was
also agreed upon.
As
the winter session approaches, that spirit of cooperation has evaporated: the Council has agreed on precious little, including the tax
rates proposed by the Centre. Worse, the pact reached earlier on administrative
control of manufacturing sector assessees has unravelled with States raising fresh concerns. The proposal to subsume in the GST all cess levies,
several of them introduced by the present NDA government, has been discarded.
This was a critical part of the official GST pitch and was backed by the
Council in September. But now the Finance Ministry is keen on an additional
cess on ultra-luxury and ‘sin’ goods to fund compensation for States losing
revenue. It has suggested a cess may be better than the 40 per cent slab for
demerit goods, mooted by a committee led by Chief Economic Advisor Arvind
Subramanian along with two other slabs of 12 per cent and 17-18 per cent. With
a four-tier GST rate structure, a 4 per cent tax on gold (in line with the
CEA’s advice), in addition to some exemptions that would be granted as tax
refunds, topped with the new cess to compensate States, the new regime could
well just be old wine in a new bottle, from the taxpayers’ perspective. Mr.
Jaitley has explained that the rate proposals are meant to prevent a spurt in retail inflation. But to bring
about convergence with States at the Council’s next meetings in November and
bring its showcase reform item back on track, the government needs to return to
the drawing board.
steer verb guide,
conduct, direct, lead.
regime noun - system,
arrangement, scheme, plan.
hard-pressed adjective
- troubled, in difficulties, under pressure/ stress.
modality noun - a particular method/procedure/way.
codify verb - arrange, systemize, organize.
unanimously adverb - without
opposition/exception, with one accord, unitedly.
evaporate verb - come to an end, vanish, fade, disappear.
precious little phrase
- extremely little; very little.
unravel verb
- solve, resolve, settle.
subsume
verb - include, absorb, cover, encompass.
spurt noun-
sudden increase (in activity).
