Arun Jaitley dismissed Rahul Gandhi’s idea of single slab GST

Vastavam web: Union Minister Arun Jaitley today dismissed the idea of a single GST slab being advocated by Congress President Rahul Gandhi as flawed , saying that it can only work in a country where the entire population has similar and high capacity to spend. The minister, in an article on ‘The GST Experience’ on completion of the first year of rollout of the Goods and Services Tax (GST), also exuded confidence the GST Council would look into rationalisation of the taxation structure after stabilisation of the collections. Rahul Gandhi has been advocating a single slab GST for India. It is a flawed idea. A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity.

Being fascinated by the Singapore model is understandable but the population profile of a state like Singapore and India is very different. Singapore can charge 7 per cent GST on food and 7 per cent on luxury goods. Will that model work for India?, the Minister questioned.Since the GST is a regressive tax, the poor have to be given a substantial relief, he said, stressing that most of food items agricultural products and the Aam Aadmi used products have to be tax exempt while some others have to be taxed at a nominal rate. There would also be a scope again, depending on the collection going up, to merge some of the mid category slabs but for that we have to see the progress of the new tax regime and the possible upward movement in the collections, the minister said.

Observing that there is always scope for improvement, he said key areas of future action will include further simplifying and rationalising the rate structure and bringing more products into the GST. I am confident that once revenue stabilises and the GST settles, the GST Council will look into these carefully and act judiciously. Referring to the issue of levying GST on petroleum products, Jaitley said that while the UPA kept petroleum products permanently outside GST, we brought them back into the Constitution as levyable to GST and can gradually impose the GST when the GST Council so decides. He further said that while Gandhi and former Finance Minister P Chidambaram have repeatedly demanded that petroleum products be forthwith brought within the GST, the finance ministers of the Congress-ruled states were against it.

When I speak to the Congress Finance Ministers’ in the states, they don’t seem to be ready for it. But what was the UPA’s own track record on petroleum products in the GST? The Constitution amendment proposed by the UPA permanently kept all petroleum products outside the GST, he said. Jaitley further said that he used the inclusion of petroleum products as a bargaining issue with the states while conceding the Central Sales Tax (CST) and compensation payment to the states. A reluctant government can never take reformist decisions. We went ahead. At the initial stage, we fixed the first set of rates. A large number of requests started coming from trades, industry and, therefore, we started rationalising the rates, he added.

The minister took comfort from the fact that the country witnessed the smoothest switch-overs in one of the largest tax reforms in the country. All the check-posts disappeared overnight. The system of input tax credit ensures that disclosures are made. The GST has encouraged enormous voluntary tax registration. Detailed calculations done in this year’s Economic Survey show that as of December 2017, about 1.7 million registrants were those who fell below the GST threshold but nevertheless chose to be part of the GST. Similarly, more than 50 percent of those who could have chosen to opt for the simpler composition scheme chose to register under the regular GST scheme, the Minister said.