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It was not the Congress alone that highlighted its five stated concerns about the Constitutional Amendment Bill to the Goods and Services Tax (GST) and moved amendments but other Opposition parties, including the Trinamool Congress (TMC), the AIADMK and Left parties, raised state specific issues they wanted to be addressed in the Bill.
Putting across their concerns at the select committee which is deliberating on the Constitutional Amendment Bill, the Congress on Friday insisted the Constitutional Amendment Bill ushering in the GST regime must explicitly mention the lower revenue neutral rate for GST at 18 per cent in the text. The government, however, said it would be difficult to stipulate the rate in a Constitution Amendment Bill. All regional parties from states, including the Samajwadi Party, were unanimous in the demand that the Centre must totally compensate states for the revenue loss incurred by them for a period of five years.
The 21 member committee on Friday started clause by clause scrutiny of the Bill, after hearing varied stakeholders.
While at present a revenue neutral rate of around 27 per cent is being talked about, sources say most are in agreement that the effective GST tax rate must be lower. Congress sources insist that a way has to be found to ensure that 18 per cent is stipulated in the Bill or in state-specific GST legislations.
An issue which found common support from several parties was the view that, at present, there was excessive weightage given to the Centre in the GST council. The Centre has 1/3 vote in the Council and all states combined together have 2/3. Therefore, any decision could be passed with ¾ majority. As such the Centre can single-handedly veto any proposal but 12 states have to come together to block it. Opposition party members are demanding that this anamoly be corrected.
Putting forward their five major demands in the form of amendments, the Congress reiterated that it wants withdrawal of the imposition of one per cent additional tax over GST for manufacturing states, inclusion of liquour and electricity within the proposed indirect taxation regime, much lower revenue neutral rate for GST at 18 per cent against around 27 per cent, a dispute settlement mechanism and an explicit compensation formula.
The Trinamool Congress had West Bengal-specific concerns which it put across as amendments. TMC wanted to know if tobacco was included in the GST Bill, then what would be the power of states to impose tax on tobacco and tobacco related products. Their concerns also related to having assurance that petrol and crude would be left out of the GST; states earn considerable revenue from petrol.
The AIADMK-ruled Tamil Nadu has stuck firm to its opposition to the bill insisting that it would be detrimental for manufacturing state like itself.
Sources indicate that with parties putting across their views on the table - this would set the ball rolling for back channel talks and negotiations spearheaded by the government, to get them on board. The government is short on numbers and would need the support of several members of the Opposition, to get the bill through in the upper house. The Opposition Congress has already made it clear that the session will be a stormy one. The Select committee is slated to submit its report within the first week of the session.
