Opposition mustn’t link it to demonetization
It is unfortunate that certain opposition parties are holding the coming Goods and Services Tax (GST) regime hostage to the Union Government's demonetisation decision. The two are unrelated and must remain so. The first is an executive decision which the Government has taken legitimately, while the second is now a constitutional mandate which all parties are expected to honour. Particularly worrisome is the obstructionist attitude of those like the Trinamool Congress which has supported the GST, and also the left Government in Kerala, which too had backed the move. Kerala's Minister for Finance has claimed that the demonetisation decision had “destroyed the States' trust” in the Centre, a view his counterpart in West Bengal appears to share.
In the first place, it is difficult to understand what demonetisation has got to do with trust deficit in a federal system between the Centre and the States. There is a GST Council in place which has representation from various States and which decides the roadmap ahead. The different slabs for the impending indirect tax system have already been agreed upon, and a few other issues that remain to be sorted out, can be handled in the coming meetings — one of which is scheduled to be held this month itself. Nearly every party — and certainly those who have been using the demonetisation issue to slam the Government — agrees that GST will be good for the nation's economy; and for consumers, manufacturers and service providers alike. Where is the logic then to stall the rolloutIJ As things stand, the earlier date of April 2017 now appears unrealistic. Perhaps it could be pushed to September of that year, and even that is uncertain. The end loser is the country. One does hope the parties exploiting demonetisation to sabotage a move which is in the larger national interest, see reason. There is so much work to be done still, and it would be wrong to create extraneous impediments in the process.
If at all there is a linkage between GST and demonetisation, it is a positive one which opposition parties ought to appreciate: Better tax compliance. The flushing out of nearly 85 per cent of money through the old Rs500 and the Rs1,000 denomination notes, the nationwide raids that have been yielding massive amounts of unaccounted wealth, and the Income Declaration Scheme that has given hoarders of black money in the country an opportunity to come clean and get away by paying taxes and penalties, are all aimed at ensuring a higher level of tax compliance. Of course, this may not be enough: A revised tax structure, both in direct and indirect forms, is needed, and one should hope that the coming Budget will unveil such a structure. The GST, with a more streamlined and uniform taxation set-up — what is being called as the first pan-India tax system — too will result in better collections and less of tax avoidance. After all, a simplified and reasonable tax structure is a huge incentive for people to not shirk from paying taxes that are due against them. Meanwhile, the theory that, since demonetisation will adversely impact the Union Government's revenue collection, the Centre will be unable to meet its obligations to the States under the GST regime, is speculative. It should be taken with a pinch of salt.