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Why Are Aap And Congress Supporters Opposing A Tax Reform Like The Gst? Are They Anti-nationals?
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GST will have the same negative impact as “Demonetization” and as fancy as it seems to have a single tax structure, it will slow down the Indian economy and be an unsuccessful shot in the dark.
One of the most important factors that everyone seems to miss is that the Centre and the States have agreed on an anti-profiteering clause in the GST.
The government has basically created a new authority which will decide whether businesses have reduced their prices enough when there is a reduction in the GST rate of the concerned good or service and, has the power of canceling registration if found guilty of profiteering and not passing on the tax benefit to consumers.
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The pestering and the intimidation of the tax police to examine a company’s pricing structure to see whether a tax cut has been passed on or not is just absurd and time-consuming, to say the least. The whole concept of free market mechanism seems to go on a holiday and the pricing structure will be controlled by the tax watchmen resulting in tremendous workload for the corporates.
The current mechanism is too broad-based and difficult to implement. Is it possible to act against an eatery in Delhi that does not pass on the gains of the tax cut to consumers?
Such a clause is only useful when proper time is given to businesses to understand the nitty gritties of GST.
It has been hastily implemented in India.
Malaysia had implemented an anti-profiteering just ahead of its GST roll out and the move was a disastrous one which actually slowed down the whole business sector and it was finally been removed. We must take a leaf out of Malaysia’s GST book.
Killing the competitiveness of the Indian market
The Indian states compete with each other to attract private investment by offering lower taxes in comparison to others. That subtly explains why Gujarat got the Tata Nano deal ultimately because it commanded lower taxes in comparison to other states.
With a single tax structure all over India, it would kill competition and it would make no difference whether to establish a manufacturing unit in Bengal or Karnataka. Historically and logically, it is always in the interests of the consumer and a corporate if there is healthy competition.
The Death Of The Federal Structure
Everyone agrees to the simple fact that GST is fundamentally anti-federal which is the sole reason why states have been resisting it. They won’t be able to raise or lower taxes as they see fit economically or politically and will always need to go to the GST Council to bring about changes. The whole voting structure to bring about change in tax rate is flawed and heavily in favor of the Union Government. Also, once in, states will not be able to opt out of GST.
All in all, GST is poised to be the next big failure in the slew of disappointing steps taken by the government.
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