The political will to make goods and services tax (GST) a reality is missing. Neither Bharatiya Janata Party (BJP) nor Congress seems to be serious to take PM Narendra Modi’s GST talks with Congress president Sonia Gandhi to its logical conclusion in Parliament.
The fate of the goods and services tax (GST) Bill is again hanging in balance with the National Herald case reigniting the fierce political battle between the BJP and the Congress party in Parliament.
Though it is difficult to make out who gains from linking GST to the political slugfest, it is clear that the biggest tax reform in the country is now more of a political issue than an economic one.
With the functioning of Parliament set to remain disturbed in the remaining days of the Winter Session as the Congress party has accused the government of using BJP leader Subramanian Swamy, who is the petitioner in the National Herald case, as a tool to embarrass its leadership, the chances of getting the GST Bill passed in this session is bleak.
Congress president Sonia Gandhi and vice president Rahul Gandhi, both, have said they will fight this ‘design’ politically and legally.
In fact, the issue makes it clear that neither BJP nor Congress seems to be serious to take Prime Minister Narendra Modi’s GST talks with Sonia Gandhi to its logical conclusion.
In any case, states like Punjab and Andhra Pradesh have already started questioning a lower revenue neutral rate (RNR) of GST proposed by chief economic advisor (CEA) Arvind Subramanian, which is being seen as a way out to placate the Congress party.
The party has demanded that the RNR should be below 18% along with the removal of 1% additional tax.
The CEA-led panel has recommended a RNR of 15-15.5% and a standard GST rate of 17-18% with the scrapping of 1% additional levy for interstate trade of goods that was to help the manufacturing states.
The NDA government now would do well by holding consultations with the states before making a fresh attempt to get the GST Bill passed in Parliament as the possibility of BJP and Congress agreeing to a workable solution seems highly unlikely.
Going by the current situation in Parliament, the GST may be heading towards cold storage, and this will be a big blow to economic reforms.