Rahul Gandhi's single slab GST idea flawed: Jaitley

Union Minister Arun Jaitley on Sunday quashed the idea of a single Goods and Services Tax (GST) slab being advocated by Congress president Rahul Gandhi and tagged it as "flawed."

In a blog, on completion of one year of the GST roll-out, Jaitley stated that Rahul's idea can only work in a country where the entire population has similar and high capacity to spend.

"Rahul Gandhi has been advocating a single slab GST for India. It is a flawed idea. A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity," Jaitley wrote in the blog titled 'The GST Experience'.

"Being fascinated by the Singapore model is understandable, but the population profile of a state like Singapore and India is very different. Singapore can charge 7 percent GST on food and 7 percent on luxury goods. Will that model work for India? Since GST is a regressive tax, the poor have to be given a substantial relief. Thus most food items - agricultural products and the Aam Aadmi used products have to be tax exempt," he added.

Further criticising the UPA government, Jaitley said that while everyone wanted the GST, "not a single state was comfortable with the UPA's model of GST".

"Firstly, the UPA government lost the confidence of the States, including the Congress ruled States. In a move towards the single tax system, the UPA asked the States to abolish the CST. It promised the States that it would give them a compensation in lieu of the CST for a certain number of years. The States acted accordingly, abolished the CST and the Central Government owed the States several thousand crores as CST compensation. When the States demanded CST compensation, the Centre would look the other way," Jaitley explained.

He added: "The second reason why the UPA failed in its effort to bring the GST was that every State was apprehensive that during the transition period there would be a loss of revenue to the States. How would the States be compensated for the loss of revenue? Their demand seemed logical but UPA chose not to address it."

The Bharatiya Janata Party (BJP) leader also questioned Congress leaders' stand on including petroleum products under GST.

"Both Rahul Gandhi and P. Chidambaram have repeatedly demanded that petroleum products be forthwith brought within the GST. When I speak to the Congress Finance Ministers' in the States, they don't seem to be ready for it. But what was the UPA's own track record on petroleum products in the GST? The Constitution amendment proposed by the UPA permanently kept all petroleum products outside the GST," Jaitley said.

"Having won over the trust of the States, I used the inclusion of petroleum products as a bargaining issue with the States while conceding the CST and compensation payment to the States. I worked out a formulae that petroleum products would be included in the Constitution amendment providing for the GST, but the council can decide the date from which to bring them into GST. The States agreed. The UPA kept petroleum products permanently outside GST. On the contrary, we brought them back into the Constitution as levyable to GST and can gradually impose the GST when the GST Council so decides," he added.

Launched on the midnight on June 30, 2018, by Prime Minister Narendra Modi and the then President Pranab Mukherjee, the taxation scheme aimed at bringing all taxes into a single window along the lines of the 'One Nation - One Tax - One Market' goal.

However, the GST has been criticised time and again by the Opposition for its negative impact on small traders and Small and Medium Enterprises (SMEs).