Damn GST - Don't
OCTOBER 16, 2019
By Vijay Kumar
IT was an interesting week. The Finance Minister Madam Nirmala Sitharaman was at her angry best in a meeting in Pune on 11th October, when a Cost Accountant told her, "If those concerns are addressed, without changing the law structure at all, it will reduce a lot of burden and everybody will be happy. It will really be termed a good and simple tax. As of today, everybody is cursing the government - industry is cursing, consultants are cursing, auditors are cursing...". At this point, the Finance Minister interrupted the questioner and retorted,
In this country, after a long time, with so many parties in the Parliament, and all state governments working together, we have come up with something.
Suddenly, and I am sorry to say this, we can't say, oh what a goddamn structure is this. It is giving us this pain...I am sorry, it is only two years. I wish from day one it met with your satisfaction.
On GST, I honestly want each one of us to give solutions for better compliance. But we can't just damn it! It has been passed in the Parliament, it has been passed in every state Assembly. It might have its flaws, it might probably give you difficulties, but I am sorry, it is the kanoon of this country. I would appeal to you all to work together to make sure we are able to have a better framework, if it is giving problems now. But don't damn it like that....
The GST Committee
Just a day before the Finance Minister's Pune meeting, the GST Council secretariat announced the constitution of a committee to suggest measures to augment GST revenue. This crowded Committee will consist of five SGST Commissioners from five States, four IRS officers representing CGST, the Joint Secretary, Revenue and an officer each from GST Council and GSTN. This is not the limit; the committee can co-opt or seek assistance from such officers from Centre/State as may be deemed necessary. Now, there is no President/Chairman for the Committee. In a hierarchy conscious government structure, where seniority will decide even seating arrangements, who will conduct the proceedings of this committee with IAS, IRS and other officers?
The Committee is to consider wide range of reforms so that a comprehensive list of suggestions may emerge. The Committee may consider looking into areas such as:
a. systemic changes in GST including checks and balances to prevent misuse,
b. measures to improve voluntary compliance,
c. policy measures and relevant changes needed in the law,
d. measures for expansion of tax base,
e. improved compliance monitoring and anti-evasion measures using better data analytics,
f. better administrative coordination.
The Committee has all of fifteen days to submit its first report. In the last two years, didn't we know about all these?
Home Critique
Writing in the Hindu, two days ago, Dr. Parakala Prabhakar commented,
There is anxiety all over about the economic slowdown in the country. While the government is still in denial mode, data flowing uninterruptedly into the public domain show that sector after sector is staring at a seriously challenging situation. Private consumption has contracted and is at an 18-quarter low of 3.1%; rural consumption is in a deep southward dive and is double the rate of the urban slowdown; credit off-take by micro and small industries remains stagnant; net exports have shown little or no growth; GDP growth is at a six-year low with the first quarter of FY20 registering just 5%; and unemployment is at a 45-year-high. The government, however, is yet to show signs that it has come to grips with what ails the economy. Much less evidence is available to believe that it has a strategic vision to address the challenges.
The essential element in the present economic quandary is the BJP's unwillingness to take its eye off the Nehruvian policy framework ball, which it continues to critique. That ball was taken out of the court in 1991 itself. The path-breaking repositioning ushered in by P.V. Narasimha Rao and his economic amanuensis Manmohan Singh remains unchallenged even today. Almost every political party that formed the government, took part in governance, or lent outside support to the government at the Centre since then embraced that repositioning. The Rao-Singh policy scaffolding remained largely unaltered in the last quarter century.,
Yet the BJP continues to attack the Nehruvian economic framework. The party think tank fails to realise that the attack remains more a political assault and can never graduate to an economic critique.
The BJP has not challenged or rejected Rao's 1991 architecture. A full-fledged embrace and an aggressive pursuit of it even now could provide the BJP and the government led by Prime Minister Narendra Modi a lodestar to steer the economy out of the choppy waters it is in at present. That architecture could help the BJP remove the present infirmity in its economic thinking. Otherwise, macroeconomic thought leadership will continue to be offered to the BJP by the shouting analysts on television and in WhatsApp forwards.
Dr. Prabhakar is the husband of Ms. Nirmala Sitharaman.
Nothing wrong, if they don't agree with each other as the Home Minister Amit Shah asked, "Do you want a country where a husband and wife must agree?"
GST Revolution?
Dr. Subramanian Swamy in his recent book, "RESET" writes,
We have witnessed the folly of demonetization and the inanity of the Goods and Services Tax (GST), both of which have accelerated the tailspin of the economy.
... there has been a shortfall of about Rs. 1 trillion in GST collection! This is an amazing admission, considering the effort by the then finance minister in 2017 in the Parliament to claim with great cinematic flair that the GST represented a tax revolution! If revolution means just going round and round (revolving), then that would be true!
The GST as a practical measure has been a flop, borrowed unthinkingly from the previous UPA government. Despite my sole protest in the Parliament, it was introduced much as a carnival, with gongs reverberating, and the president, prime minister, speaker of the Lok Sabha and the finance minister on stage. Today, we are saddled with redistributed tax revenue collection of nearly Rs. 1 trillion.
The manufacturing sector is progressing at a tepid or slow growth rate of less than 5 per cent per year because of lack of perceived demand, pressure from imports, debt-stressed balance sheets, and more importantly, unwieldy paperwork of the GST that hurt the ease of doing business.
Pay The Damn Taxes
The Government is in a bad mood, naturally so when GST collections are going down and it is not good for the country if the mood of the government is bad. To brighten up the mood of the government, we should all pitch in and pay a little more taxes; if we don't, they will take it by unpleasant means. For the government, the taxpayers are like the goose that lays golden eggs. It is the duty and responsibility of the goose to lay those golden eggs and if it stops laying those eggs, it will have to face the consequences. So, better pay those goddamned taxes and be happy. And don't ever damn GST; it is here to stay; dammit, we have to learn to live with it.
Until Next Week
