GST council announces changes in tax slabs: Congress has let massive talking point slip to BJP

GST council announces changes in tax slabs: Congress has let massive talking point slip to BJP
By: Ritika shree
11 Nov 2017

Two former union finance ministers P Chidambaram and Yashwant Sinha decided to make headlines over GST even before current finance minister Arun Jaitley's announcement on the matter. Jaitley on Friday did away with some of irritants in new tax regime and simplified some of the procedures. The number of items in the highest tax bracket was reduced from 228 to 50.

The GST council meetings are structured in such a way that each of these meetings have turned into a mini-budget exercise. In the meeting held on Friday, tax on 178 items was substantially reduced, and tax at air-conditioned restaurants was reduced from 18 percent to 5 percent. The pulse of the people, too, changes according to the developments after every council meet. Now, only “luxury” and “sin” items remain in highest tax bracket.

The coincidence of Chidambaram and Sinha targeting Arun Jaitley at this time thus becomes even more interesting. The protagonists of the government would argue that PM Modi and FM Jaitley have been receptive to the popular pulse, and recognised problems that had crept while implementing the gigantic tax regime. That’s something critics and cynics would not like, particularly when the first phase of polling in Gujarat is less than one month away.

While Chidambaram didn’t name Jaitley, Sinha named the incumbent finance minister and launched an attack on him. Though Sinha and Chidambaram belong to two different political streams, lately they have found a common meeting ground in finding faults against their successor in particular, and the Modi regime in general.

Their attack on Jaitley and the GST provisions, though made separately but timed together, comes at when the Modi government and the GST council is working hard to correct initial anomalies that had been there. The former finance ministers apparently want to cash in on angered sentiments among sections of the business and trading community over the way in which the new tax regime had been implemented.

Let us examine Sinha and Chidamabaram’s points separately and see how they stand to scrutiny.

Consider what Sinha as the head of the parliamentary standing committee on Finance in the previous Lok Sabha had said in June 2012 when the UPA was in power: “"We are targeting the Monsoon Session (beginning July). I don't want the committee to take the blame and face allegations that we are standing in the way of progressive legislation reforms," Sinha told reporters after the first meeting of the panel on the legislation. "We can be working harder than we do. We will try to submit our report by the Monsoon Session of the Parliament.”

Sinha has now turned into a bitter critic of the Modi government. While this is known, on Friday, he surprised everyone by demanding the removal of Arun Jaitley from the finance ministry portfolio. The former finance minister was not content only with seeking Jaitley’s removal, but also wanted a new committee to be set up under the chairmanship of Vijay Kelkar to look into various debatable aspects of GST. “The present finance minister did not apply his mind. Had it been the case, then there was no need to change the tax structure so frequently. It means the system is not working”, he added.

Technically Sinha is still part of the ruling BJP and his son Jayant Sinha continues to be a union minister. But for all practical purposes, Sinha Senior has joined the ranks of the anti-Modi brigade and is willing to speak at any forum and side with any person who is against the Modi and the BJP. Last month, he attended Congress leader Manish Tiwari’s `Tidings of Troubled Times’ and shared the dais with Arvind Kejriwal. Later, he agreed to speak at a Congress-sponsored forum in Gujarat, and on Friday, he attended a function organised by dissident JD(U) leader Uday Narayan Chaudhary, where he blasted the Modi government, Jaitley and Nitish Kumar.

By making an all out against the Modi, Sinha has perhaps crossed the thin line between being a critic and a cynic.

Now let us take Chidambaram’s contentions into consideration. In an article headlined as `A tryst with destination tax’ published in The Indian Express in June this year, he began by saying: “Not many years ago, we made a tryst with destination tax, and now the time comes when we shall redeem our pledge, not wholly or in full measure, but we hope substantially. At the stroke of the midnight hour, when businesspersons and consumers spend a sleepless night, India will awake to a new tax regime. A moment comes, which comes but rarely in our economic history, when we step out from the old to the new, when a century ends, and when the tax payers of a nation, long oppressed, hope to find a new dawn.”

The words “panic-stricken government” and “thanks to Gujarat election” are important here. It should be noted that under a democratic process, the government in India is popularly elected and the constitution of the GST council is such that it has finance ministers of all the states and the Centre, and is thus well and truly federal in nature. It was only fitting of the political leadership in the governments at the Centre and of the states that they responded to popular concerns about GST issues.

The Congress could well have taken the credit of the GST council removing 178 items from the highest tax category and could have gone to the Gujarat elections on a buoyant note. However, the party has passed on this massive talking point in the Gujarat elections to the BJP. The BJP would love to grab this opportunity and go to the electorate on a positive note.