Kolkata: At a time when union finance minister Arun Jaitley is pressing for GST and hopes to roll it out by September 2017, state finance minister Amit Mitra said on Thursday that a majority of the state finance ministers are against immediate implementation of the goods & services tax (GST) as they believe that GST will offer a double shock for the economy which has suffered due of demonetisation.
Mr Mitra, who is also the chairperson of the empowered committee of ministers on GST said, “We are in favour of GST though we know it would have an adverse impact on the state finance initially. But we were agreed to take that initial stress for a good cause. However, the tsunami of sudden demonetisation of old high value currencies has totally destabilised the country’s economy. In such a situation, majority of the state finance ministers think that the two big hits- one of demonetisation and another of GST will be hard for the economy to accept.”
The state finance minister then compared the tax targets set for states in the GST plan that would have widened the tax base.
“States had set a target of reaching the 14% mark on the revenue front, post GST. States that wouldn’t make it to 14% would be compensated, as per the plan. It was all decided that the compensation won’t come from the Consolidated Fund. Instead, the government will set up a special fund. But all these were before demonetisation. We all fear now that states won’t be able to reach the target amidst the prevailing economic situation. Demonetisation has destabilised the GST switch over plan,” Mr. Mitra said.
He added that the sudden demonetisation, has resulted in a recession like situation and a 2 per cent decline in GDP is predicted. “GST rollout is impossible in this circumstances. Let the economy stabilise at first. GST is lost in this horrible case of demonetisation “ Mr. Mitra said.
