The Congress party is set to promise a revamped goods and services tax, or GST, in its manifesto for the 2019 Lok Sabhapolls.
A Congress-led government at the Centre in 2019 would launch a compehensive redesign of the current architecture of the GST, party leaders said on Tuesday.
“The current design of the GST has defects, and is flawed to the extent that mere tinkering is not the solution. The Congress government at the Centre in 2019 will bring the next generation of GST,” Punjab finance minister Manpreet Singh Badal, addressing a press conference at the party’s headquarters in New Delhi, said.
Sources in the Congress party’s manifesto drafting committee said a revamped simpler GST with a single tax rate would be a key election plank of the Congress for the 2019 polls, along with reducing agrarian distress and suggesting ways to create jobs for youth.
The Punjab finance minister said the current GST has had over a thousand changes, and was like a kurta full of patchwork. “Instead of putting more patches, it is time the tailor stitches a new kurta,” Badal said.
However, Badal rejected speculation that the Congress favoured scrapping GST altogether, as Malaysian prime minister Mahathir Mohamed did after winning the election in his country earlier this year on the back of promising jettisoning the GST.
“Farming is no longer feasible with the help of bullocks. A tractor is essential for ploughing the field, and so is GST necessary. The Congress party would not sacrifice GST, which is our brainchild, for earning some cheap publicity during the election campaign. We would not sacrifice GST for a win in 2019 polls,” he said.
Congress party sources said a Congress-led government would be willing to amend the Constitution to get India a GST 2.0. “However, that might not be necessary. I believe the GST Council is empowered enough to carry out the amendments needed to correct the flaws,” said Congress spokesperson on economic affairs Gourav Vallabh.
The Congress party’s GST version 2.0 would correct the major flaws of the current architecture of the tax by making it simpler, rectify the distortion in tax rates, provide for ‘manual inputs’, consult stakeholders and improve the technology network.
Badal said the Congress also wants petrol and electricity to come within the GST ambit. He said the Bharatiya Janata Party (BJP) is spreading misinformation that Congress finance ministers opposed the move to lower taxes.
“These have been all Congress suggestions in the earlier GST meetings. These are now part of the minutes of the GST Council meetings. The BJP agreed to lower taxes because of the Gujarat Assembly polls (in December 2017), and is now nervous after its recent Assembly poll losses,” Badal said.
The Punjab finance minister the Congress has demanded tax rationalization for the textile sector, which is a labour intensive sector and creates jobs; increase the composition limit for the MSME (micro, small and medium enterprises), exempt job work in various industries, including bicycle industry, from GST.
Badal said the government needed to check evasion of GST. Badal said the flawed GST has caused a drop of two per cent in the gross domestic product, or GDP, of the country. He said the Congress favoured a single rate GST, or maximum of two rates.
Badal, who leads the Congress party’s state finance ministers in the meeting of the GST Council, complained that the Centre circulated agenda of the meeting late on the eve of the meeting, and early morning, which prevented state finance ministers of non-National Democratic Alliance (NDA) state governments from doing a scrutiny of the agenda.
According to Badal, Finance Minister Arun Jaitley told the Congress state finance ministers that he was a democrat and agreed that the position of the vice chairperson at the GST Council should go to the Congress party. A decision on this is likely in the next GST Council meeting.
Congress leaders also ridiculed the change in Narendra Modi government's position on a single GST rate. In his blog on Monday, Finance Minister Jaitley stated that "the country should eventually have a GST which will have only slabs of zero, 5% and standard rate with luxury and sin goods as an exception." On Tuesday, Congress leader Jairam Ramesh tweeted: "Climate change: BM (bluff master) NaMo on July 1, 2018: How can Mercedes and milk be taxed at same rate? BM (Blog mantri) Jaitley on December 24, 2018: India must work towards a single rate GST."
Fixing The Patchwork?
- The current design of the GST has defects, and is flawed to the extent that mere tinkering is not the solution, Punjab finance minister Manpreet Singh Badal said
- Badal said the current GST has had over a thousand changes, and was like a kurta full of patchwork
- The Congress also wants petrol and electricity to come within the GST ambit
- The flawed GST has caused a drop of 2 per cent in the gross domestic product, He added