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Arun Jaitley tells why govt must not cut GST rates further; also opposes single tax slab

As the Goods and Services Tax turns two years old on Monday, Arun Jaitley wrote a blog and explained that a sudden reduction in tax slabs further will massively hit the government’s revenues.

Arun Jaitley, Finance Minister, Modi cabinet, Modi New Cabinet, Jaitley Health, मोदी कैबिनेट, अरुण जेटली, वित्त मंत्री, Lok sabha Election 2019
मोदी कैबिनेट में क्या जेटली फिर बनेंगे वित्त मंत्री
Arun Jaitley, Finance Minister, Modi cabinet, Modi New Cabinet, Jaitley Health, मोदी कैबिनेट, अरुण जेटली, वित्त मंत्री, Lok sabha Election 2019
Former Finance Minister Arun Jaitley

Former Finance Minister Arun Jaitley has said that the government should not bring down GST rates further as that will leave the government without resources to spend. As the Goods and Services Tax turns two years old on Monday, Arun Jaitley wrote a blog and explained that a sudden reduction in tax slabs further will massively hit the government’s revenues and will leave it without money for expenditure. He also tweeted this from his official Twitter handle. With the upcoming budget, there were hopes around bringing tax slabs down further from the earlier standard slabs of 5%, 12%, 18% and 28%. Currently, the government levies the most premium tax slab of 28% on luxury, sin & some white goods.

With the implementation of GST, 28% tax is the maximum that one pays, barring on luxury and sin goods, which attract a cess too. However, in the pre-GST rate of taxation, the taxes went as high as 110%, said Arun Jaitley. “The entertainment tax was being levied by the States from 35% to 110%,” he said, adding that the bringing down of tax rates has already led to a loss of revenue by Rs.90,000 crore annually.

The case against single tax slab

The former finance minister also said that a single tax slab would be a regressive idea as well. Explaining the same, he said that a single tax slab is possible only in a country where there are no poor people. “It would be inequitable to apply a single rate in countries where there are a large number of people below the poverty line,” he said; one cannot tax a Hawai chappal and a Mercedes car at the same rate. One tax slab means rich and poor pay the same tax. “The direct tax is a progressive tax. The more you earn, the more you pay.

An indirect tax is a regressive tax,” he wrote in his blog. However, he did not reject the idea that there is a need for rationalization of taxes and said that the process is underway for the same. Also, multiple tax slabs ensure that the Aam Aadmi products are not taxed exorbitantly, and it has also checked inflation, Arun Jaitley said.

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