Unfinished agenda of rolling out gst

Unfinished agenda of rolling out gst

A major tax reform such as the goods and services tax (GST) is bound to have teething problems. This was fully anticipated and taxmen at the state and central levels are geared up to fix them. What was not anticipated is the introduction of new taxes and levies and new inspections that would thwart the gains of subsuming most indirect taxes other than customs duty into GST, except in the case of those goods and services that have been kept outside the ambit of the tax for the time being. This must not be allowed and not only must Maharashtra and Tamil Nadu that have initiated new levies in the wake of GST reverse their fiscal impetuousness but the GST Council must convene to resolve against such self-defeatist moves.
The Constitution vests in state governments the authority to decide what taxes and levies local bodies such as municipalities and panchayats would levy, via Article 243H for Panchayats and Article 243X for municipalities.
These articles also authorise states to transfer taxes, collection and grants to local bodies. Articles 243I and 243Y ask the states to set up five-yearly finance commissions to determine how much of their revenues would be devolved to and amongst local bodies. These provisions fix accountability on state governments to prevent tax adventurism on the part of local bodies while making sure they get adequate resources.
The existing GST rates have been fixed to achieve revenue neutrality. Which means that collections under GST would be at least equal to what the states used to collect pre-GST, and the Centre will make good any deficit.
This being the case, states have no justification whatsoever in introducing new levies, such as Maharashtra’s increased vehicle tax or Tamil Nadu’s entertainment tax, to compensate for levies given up, such as octroi.
Now that tax inspectors no longer have to stop vehicles on the road, other babus have taken it upon themselves to stop cargo vehicles on the road for random checks. Such harassment must end, to prevent a revolt against GST. The point is to make GST exhaustive and efficient, not to undermine it.