The repeated piecemeal tinkering with the rates of the Goods and Services Tax is really unfair on consumers and confirms that its hasty introduction by the then finance minister was a bad move. Consumers had to pay high prices all these months for items whose rates have now been lowered. There’s a promise that more rates will be reduced later. It’s puzzling why the GST Council can’t sit, discuss the issue threadbare and cut the rates in one go. The rationale behind this tweaking isn’t clear, though some say it was done to woo urban and rural voters ahead of the forthcoming elections. It will, for instance, make TV sets cheaper in rural areas. Time will tell if this move pays off, but consumers should worry about how the government is playing with GST. Using GST to further the government’s political agenda is just bad economics. The government will have to forego Rs 8,000 crores to Rs 10,000 crores in revenue, but the move is expected to lead to greater tax compliance and widening the tax net.
Demonetisation, it was said, would also widen the tax net, but the promised relief to honest taxpayers by then FM Arun Jaitley is yet to materialise. It’s akin to the government’s claim that it would get all the black money held in Swiss banks by Indians and put Rs 15 lakhs in every Indian’s bank account. Perhaps Piyush Goyal should be reminded about his predecessor’s promise. There are, of course, a few obvious benefits — it will further the ease of doing business, help small and medium businesses and simplify the system of paying taxes by taxpayers.
