Even though no major change is expected in the relative strengths of the ruling and opposition benches in the Rajya Sabha where some 55 seats will have new incumbents next month, the NDA government is hoping against hope on the long-stalled Goods and Services Tax (GST) Constitutional Amendment Bill.
Even though no major change is expected in the relative strengths of the ruling and opposition benches in the Rajya Sabha where some 55 seats will have new incumbents next month, the NDA government is hoping against hope on the long-stalled Goods and Services Tax (GST) Constitutional Amendment Bill. The recent electoral drubbing of the Congress, which staunchly blocked the crucial reform Bill insisting on certain difficult amendments, is expected to further dent its ability to influence parties outside both coalitions — NDA and UPA — government managers reckon. Unexpected support to the Bill from West Bengal chief minister Mamata Banerjee, whose Trinamool Congress romped home in the recent assembly elections, is seen as the harbinger of things to come.
With Banerjee’s statement, the state’s finance minister Amit Mitra would likely become more proactive in his role as the chairman of the empowered committee of state finance ministers. The state FMs’ panel has an important job at hand in defining the contours of GST and putting in place the administrative and IT machinery for its smooth implementation.
Although the two-third majority of 164 votes required for the passage of the Constitutional Bill in the 245-member Upper House is far higher than the NDA’s tally of 66, the fact a sizeable section of the House belongs to neither coalition gives the NDA hope.
The Trinamool Congress’ current RS tally is 12. The government is confident that it can convince J Jayalalithaa’s AIADMK, which expressed the fear that GST would undermine the states’ fiscal autonomy, that such concerns are unfounded. The state had opposed opposed value-added tax (VAT) initially but has later come to appreciate its potency in revenue enhancement. Other non-NDA parties the government hopes to rope in for GST are the Samajwadi Party, with 15 members, BSP with 10 and even the NCP with six. The CPI(M) has not spoken against the GST either (former West Bengal chief minister and party member Asim Dasgupta played a major role in the rolling out of state VAT system as chairman of the empowered committee) but given its political hue, could be concerned about being seen as helping the NDA.
The Congress wants the GST rate to be included in the Constitution, a proposal widely seen to be impractical.
That’s because it would constrain the ability of the proposed GST council comprising the Centre and states to change rates when expediency demands it. The NDA government has more than once indicated that it is open to accepting the Congress’ recommendation for the removal of 1% origin-based tax on interstate sale of goods. A panel headed by chief economic adviser in the finance ministry Arvind Subramanian had also endorsed this idea, as such a tax would militate against the structure of GST, which is a destination-based tax on consumption.
In what displayed the government’s growing impatience with the Congress’s obstinate stance, finance minister Arun Jaitley has recently said the government could seek voting on the GST Constitution amendment Bill in the Rajya Sabha in the monsoon session in case the Congress continues to oppose the long-pending indirect tax reform. Jaitley had also said earlier he is looking at a rate lower than 18%, while the CEA panel had put the main rate at 17-18%, a level that seems competitive among some emerging market economies and probably against the EU.