Letters: Taxing issues

In the editorial, "Troubled GST" (February 8), there is a reference that the government should show its willingness to address the concerns of the Congress on three points. I think the government has done more than enough to accommodate the views of the Congress.

Let us take the point on one per cent tax on inter-state transfer of goods. Actually, the tax is on sale, not on transfer. In any case, the government has already agreed to this and said it would approach the states to convince them.

Regarding the point on formation of a dispute settlement authority, the real issue is the Supreme Court's role therein. This demand was never made in the original Goods and Services Tax Bill tabled by the Congress. If it were mentioned, there would be court cases relating to the amount of tax, with respect to which the Supreme Court has said it does not want to interfere.

Acts such as those concerning customs and excise mention the jurisdiction of the Supreme Court and high courts because that relates to the determination of correct rate of duty, not the imposition of it. Even if it were not mentioned, the Supreme Court could still intervene if the matter related to the violation of Fundamental Rights.

The Supreme Court's jurisdiction cannot be defined in any Act of Parliament. The issue is legally meaningless and an unnecessary talking point of the Congress. The government cannot by any means agree to it.

The Congress' demand of a maximum 18 per cent tax is not a rational one and is aimed only at stalling the GST Bill. The chief economic advisor's report has sought to cap the tax on gold at two to six per cent, a luxury tax at 40 per cent and standard rates of 16.9 per cent to 18.9 per cent in all other cases.

A single rate works out to 15.05 to 15.50 per cent. These rates are comparable to the two per cent, 12 per cent and the standard 22.8 per cent suggested by National Institute of Public Finance and Policy (NIPFP). Its suggested single rate is 17.69 per cent.

These experts have always asked for a much higher rate of 22.8 per cent or 40 per cent. But both the chief economic advisor and the NIPFP have agreed on the impossibility of charging a standard rate of 12 per cent on gold. The chief economic advisor has not agreed on charging of a standard luxury rate. So fixing the rate once and for all at less than 18 per cent is out of the question. This may be possible when the economy develops, but not at present. More than half the countries in the world enforce multiple and high rates.

The editorial paints both the government and the Opposition with the same brush in terms of their failures. That is not true. Business Standard has never failed to call a spade a spade.

Sukumar Mukhopadhyay New Delhi

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