INDIRECT TAXES
| Held hostage by politicians, GST may miss next rollout deadline too Mon, 20 Sep 2010 21:43:57 GMT |
| The Economic Times Held hostage by politicians, GST may miss next rollout deadline too NEW DELHI: The deadlock that threatens to derail the country’s most ambitious indirect tax reform looks far from being resolved as the BJP-ruled states alongwith others hardened their position against the draft constitutional amendment bill needed to implement the goods and services tax or GST. “Most of the BJP-ruled states are opposing the bill.... UP and Tamil Nadu want that their autonomy should not be affected,” Haryana Finance Minister Ajay Singh Yadav told reporters, a clear indication of political agenda hijacking the economic one. Punjab FM Manpreet Singh Badal also opined that politics had taken over. “I think so,” he said when asked whether there was a political agenda in opposing the draft. The GST, that seeks to replace indirect taxes such as central excise duty and services tax and state taxes including value-added tax, entry tax and purchase tax with a neat single levy, has already been delayed by an year. With the fresh opposition to the centre’s proposal on constitutional amendment and the structure implementing the new tax from middle of the next fiscal could also prove to be an uphill task. “A good number of states have agreed to the revised draft proposal of the the centre...Few states disagreed with this amendment bill as it stands now,” said Asim Dasgupta, chairman of the empowered committee of state finance ministers and West Bengal finance minister. Constitution has to be amended to allow the Parliament and state assemblies to tax same items. At present, the centre can impose tax on goods at the factory gate and services while states can only tax goods at retail level. States do not have the power to levy tax on services. The constitutional amendment has to be supported by two-thirds of members present at the time of voting in the Parliament and ratified by 15 state assemblies. Thus, it is important for the United Progressive Alliance government to muster the much-needed political support for this crucial tax reform. The Centre on its part has attempted to accommodate states’ concerns but that has failed to cut ice with them. Some state governments have sought a clear assurance their fiscal autonomy. The centre had dropped the contentious veto power of union finance minister in the proposed joint council in the constitutional amendment bill after strong protests from states. But, now states want more. They want the centre to drop the proposed dispute settlement body, explicitly define what would decision by consensus in the joint council mean and changes in the structure of GST. |
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