The GST Imbroglio
SEPTEMBER 04, 2015
By Dr G Shreekumar Menon, IRS (Rtd)
THE GST which was mooted as an idea in the year 2000 has been in incubation for the last fifteen years. Another unsuccessful attempt was seen on 6th May 2015 to push it through. The imbroglio continues as it is an unwritten national policy to Disrupt, Delay, Frustrate& Terminate (DDFT). The fate of the Land Bill is a testimony for the efficiency of this policy. Every political party and bureaucratic institution has this policy embedded in their DNA. We have successfully employed this policy from pre-Independence days to sabotage every venture and scheme, thereby hindering the progress and development of our country.
Now, the next move of the Government is to manufacture a "consensus" among like-minded parties to push through the GST Bill.How long this exercise is going to take is unknown? As political manoeuvres and intrigues dominate the political landscape, everybody forgets the volatile "Youth power" that propelled Team Modi to victory. The "Youth" are impatient, capricious and unforgiving, it will not be possible to keep captivating them on the power of sheer oratory, for it is their dreams that are getting asphyxiated and strangulated, by conspiring politicians and indolent bureaucrats. The meteoric rise of a young 22 year old Hardik Patel in Gujarat is a grim portent of revolutionary sweeps that can again change the political landscape of this country. The youth rush to anybody who can promise Utopia. The youth of today are an ignited lot, while thousands flee every year to Western countries for higher education and refuse to return, millions are trapped here in economic backwardness and utter lack of avenues to earn a decent livelihood. They are suffering and will continue to suffer as long as the policy of DDFT is kept alive by crafty politicians and manipulating bureaucrats.
The government should not waste its time on the formless and shapeless GST, and stop projecting it as a panacea for the taxation ills of this country. After all, the GST is set to be implemented and executed by the very same set up that is responsible for the ills that plague our present indirect taxes. What is the guarantee that the GST will also not get infected by the very same virus that has affected our present tax system? The present system has generated lakhs of tax disputes, massive tax evasion and consequent black money. What is the guarantee that the GST will not repeat these ills?Revenue is nowadays not "collected" but "remitted" by honest taxpayers, this reality should not be obscured by pretensions that GST will be a game changer. Any system of taxation, be it our present defective system or the unborn GST, is viewed by the common man as legalized pillage. The great French economist Frederic Bastiat, observes "The State is the great fiction through which everyone endeavors to live at the expense of everyone else…We shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State. The public treasury will be literally pillaged. Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: Let me have the benefits and let others pay the costs. Everyone will be directed towards snatching a scrap of fraternal privilege from the Legislature. The suffering classes, although having the greatest claim, will not always have the greatest success". Do we not see the crystal clear scenario of present day India in the above lines?
Frederic Bastiat, further goes on to say "When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it". This is exactly what our crafty politicians and scheming bureaucrats have successfully collaborated and created. Can the GST alter the above equation dramatically? My answer is a firm NO. Our politicians and bureaucrats will continue conspiring to commit legal plunder. Yet again, to borrow from Frederic Bastiat "Legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, guaranteed jobs, guaranteed profits, minimum wages, free credit and so on and so on". This is what is happening in our country and this is what will continue to happen in the GST regime also. So why fret over GST? If maximization of tax revenues is the objective, the same can be achieved even without GST. The Finance Minister needs an abundant flow of fresh ideas, bold new initiatives that does not require political or bureaucratic cooperation. This is achieved by the institution of Think Tanks. The U.S. President and his team are advised and guided by a battery of Think Tanks. Intelligentsia, University professors, experts, professionals, thinkers and even students, are all employed to bolster the effectiveness of Think Tanks. The Chinese have been quick to understand the efficacy of Think Tanks. They have set up over 100 national level Think Tanks by replicating the U.S. model of policy advice that is independent of powerful ministries. Our Finance Minister also needs to create several Think Tanks who will advise him on fresh new tax initiatives, streamlining tax administration, achieving reduced tax litigations, outsourcing tax collections to private players who will collect it on daily basis instead of the present monthly system which is allowing crores of rupees of tax payer's money being circulated among private players without any interest being charged, and leading to tax evasion also.Ever since Independence, tax policy and annual budget preparation has been a secret dialogue between the FM and a handful of bureaucrats, and select clandestine "special interests". "Greeks consider taxes as theft" said Aristides Hatzis, Associate Professor of Law & Economics at the University of Athens. Indians would also enthusiastically agree with the Greek view. Taxes affect the entire population and, therefore, a broad based dialogue is needed to create a climate of tax consciousness in the public. Our Prime Minister has travelled far and wide to procure investments but what has been done to create global tax competitiveness in order to attract foreign investment? We have not even done any exercise to identify the State which has the most regressive tax system.
Time should not be wasted fretting and fuming over non-passage of the GST Bill in Parliament. A lot needs to be done to reform our entire tax processes and the tax administration before the GST can be enforced. Prepare the pitch before the game starts. FM needs to get going at a feverish pace, there is no time to stand and stare.
(The author is Ex Director General, National Academy of Customs, Excise & Narcotics & Fellow, James Martin Center for Non Proliferation Studies, U.S.A.)
|
(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the sites)
|
