Bring in new GST with single low rate as starting point: Congress
Stating that there are “serious birth defects” in the current GST regime, the Congress on Friday said for the first time that it should be scrapped and replaced by a new law that would replace the “single low rate” as a “starting point”. as provides. And then “Complete further steps”.
Senior Congress leader Jairam Ramesh called for a discussion in Parliament and asked the government to convene an all-party meeting. He said that some “tinkering” here will not work, a fundamental change is needed.
Addressing a press conference with Ramesh, former finance minister P Chidambaram said that there were “serious birth defects” in the GST and that “in the last five years these defects have only gotten worse and everyone touched by the GST has been seriously affected.” have been injured.”
“The first thing that has to be done is to get rid of these six (tax) rates. You should have the same low rate. That is, GST. Worldwide, that is GST… it has to be the same low rate. That is the starting point… If you make an error at the starting point, your entire path, your journey along the path, will be wrong. So let’s end this GST. Let’s go back to the drawing board, starting with a low rate. And then work on the further steps,” said Chidambaram.
Interestingly, the Congress was largely silent on the GST at its Udaipur convention, even demanding that the act be reviewed or even repealed. AICC data analytics department head Praveen Chakraborty, besides some senior leaders including former Union ministers Anand Sharma, Manish Tewari and Mani Shankar Aiyar, raised these views during the deliberations of the Chidambaram-led group on economic matters. But Chidambaram had argued that the repeal was a very radical idea, and needed to be discussed at a separate party level as it was outside the mandate of the group.
On Friday, Chidambaram said: “How many absurdities are there in this law… it is very difficult to fix the law, you have to change the law”. For example, he said, “there are serious problems with the taxation by the two authorities.”
“Half of the taxpayers come under the jurisdiction of the Center and half come under the jurisdiction of the states. It is a vertical division, whereas logically, if you have to divide administrative powers, it should be a horizontal division. Small taxpayers, small businessmen should not go after the central tax collector,” he said.
“The law is so flawed that the government has been forced to issue hundreds of executive instructions. In five years, the government has issued 869 notifications, 143 circulars and 38 orders. It’s a change every other day. This is a GST that is flawed, faulty and unstable,” he said.
“The so-called GST that is applicable today was not the GST envisaged by the UPA government. The GST that UPA envisioned was a single, low rate on all goods and services with certain exemptions. “The GST that we have today It is a complex web of multiple rates, conditions, exceptions and exemptions that would completely stun an informed taxpayer. Not all registered dealers are informed taxpayers; as a result, they are at the mercy of the tax-collector,” he said.
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He said that the flawed GST has destroyed the MSMEs in a big way. He said the worst outcome has been a complete breach of trust between the Center and the states. He argued that the GST Council is useless and state finance ministers, including those in BJP-ruled states, are unhappy.
“There is no real consensus in the meetings of the GST Council. The contrasting formula on voting rights of the Center and the states has been used by the Center to push for decisions that have been strongly opposed by privately held states, including those ruled by the BJP. The withdrawal of arrears of compensation cess and excessive recourse to cesses (instead of shareable taxes) have widened the gap between the two parties,” he said.
He said the Congress, if voted to power in 2024, would “work towards replacing the current GST with GST 2.0 which would be a single, lower rate.”
On GST dues, Chidambaram said: “We don’t know what the truth is. According to the Centre, it has ordered the clearance of all dues by May 31, 2022. Only the June portion is to be paid. According to the states, they think there are huge arrears… unless either the General Controller of Accounts, or even better the Comptroller and Auditor General, can determine how much was collected during each year and how much was shared. But does not publish a definitive report. Whether undershared or overshared, we don’t know… sitting in opposition, no way of knowing. The states say there is arrears, and the center says we have cleared.