Taking a leaf out of demonetisation, it can be assumed that any reform brings with it fears and excitement. People must trust the Government on GST
In an eerie resemblance to the orchestrated and frenetic noise around demonetisation, even before its contours had been defined, it appears that a similar effort is being made to spread a counter narrative on the Goods and Services Tax (GST). Prime Minister Narendra Modi gave his biggest defense when he made a fervent plea to the top 20 chief executive officers of the US, telling them that the implementation of the landmark initiative, GST, could be a subject of studies in business schools in the US. Calling it a “big decision” and which affirms the Government's ability to take historic calls, Prime Minister Modi termed the GST as a shining example of minimum Government, maximum governance.
West Bengal has been one of the most vociferous in expressing its reservations and its Finance Minister has even asked for extension of the implementation date of the GST. Early in June, he said that the roll out of the GST from July 1 will have “serious problems” and that there is no harm in delaying its implementation by a month.
However, Union Finance Minister Arunj Jaitley was quick to counter him and made it clear that he would stick to the target date. Apprehensions have also been raised about multiple rates — while initially the GST was supposed to be truly one nation one tax, it has boiled down to six categories of goods, with GST rates at five, 12, 18 and 28 per cent, besides the exempted and zero rated goods. Meanwhile, industries too have raised concerns over the anti-profiteering measures, which many assume could be a tool for the Government to arm-twist the industry. Issues like casual taxable person, dual control, taxation of free supplies between parties, fear of high tax rates are some other concerns that have been raised.
Taking a leaf out of the demonetisation experience, it is safe to say that any reform, especially disruptive changes, brings with it varied fears and excitement. It is also certain that such reforms do carry sets of challenges and even while recognising these, Governments do create in-built mechanisms to address them. There's no reason to believe that this has not been done in case of GST. While people should have full faith in the Government which is mandated with the task of bringing such reforms, they are equally within the rights to express concerns. However, it must be noted that any Government will take decisions which are in the larger good of all.
The narrative of the Government on GST, as reiterated by the Prime Minister in his US trip, is full of progressive measures and a big-ticket item to catapult India into the big league. There are simple and complex arguments, and one must give heed to these.
What the GST will do is to amalgamate over 15 central and State taxes into a single tax, thereby mitigating cascading or double taxation in a major way, and help create a unified national market. “From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated to be around 25 per cent to 30 per cent. The Introduction of GST will also make Indian products competitive in domestic and international markets. Studies show that this would have a boosting impact on economic growth. last but not the least, this tax, because of its transparent and self-policing character, would be easier to administer,” says a note on website of Central Board of Excise & Customs (CBEC) of the Ministry of Finance.
It requires an erudite economist to comprehend the finer nuances, as average citizens, we should see the merit in some of these simple arguments. As the Prime Minister asserted during his US trip, this may be the pinnacle of 7,000 such reforms that promise to bring about paradigm shift in the way we do business. The short yet highly effective promotional film capturing the essence of GST and featuring Amitabh Bachchan also does a good job of simplifying the concept. Skeptics may wait and watch, and desperately hope that Bachchan's hands gets entangled in the thread maze. However, for all you know it might end in as bizarre a manner as it did on demonetisation!
(The writer is a strategic communications professional)