GST: A Revolutionary Idea at the Gunpoint of Politics

Although the idea of GST, from the way it has been implemented, feels like a vote-attracting fort built overnight, it has in actuality, taken eighteen years of constant approvals and renovations to get into the framework of the Indian economic ideal. After pondering over a year, the government finally decided to exempt sanitary napkins from GST, an admittedly remarkable feat. With the recent revolutionary changes in GST- cutting taxes on Raakhis, television, foot wears and a hundred other substances aiming at the middle class, the government is making it crystal clear that no hugs can match up to the implemented economic reforms.

While looking into the complex tax structure of GST, the one factor we need to keep in mind is that it is not just a compensation paid for the tragic losses of demonetisation. When Vajpayee had brought the idea of GST as a perfect solution for the imbalanced tax structure of India, it was everything that the country needed. The Empowered Committee (EC), consisting of state finance ministers who came together to form a proposal for GST, had addressed nearly all the issues that India would face while implementing GST. After thirteen years when the proposal for GST was presented in the parliament after offering a compensation of 9000 crores for each state for the initial loses, the whole idea was trashed by the BJP-led Gujarat, fearing that the state would have to bear an annual loss of 14,000 crores per annum.

In 2014, after the victory of BJP, the first thing that the newly formed government went for was a silent subtle search in the trash can and victoriously the whole new bill for GST was again announced in the parliament. Though the government had to face a few minor blockades within a few months after the implementation of demonetization, GST was announced as one of the most major economic reforms that the country had ever seen without even having one-month-old legs to stand on. The policy of ‘learn from the consequences’ adopted by the ruling party maybe, in the long run, will prove to be worthy. GST in the one year after implementation has been through countless structural changes, inevitable in the largest democracy in the world. Perhaps with a bit more time and effort GST would not have ended up as a poorly implemented economic reform.

Only four countries starting with Pakistan, Italy, Luxembourg, and India have a four-layered GST structure. India, keen on standing out amongst all the other 115 countries that have implemented GST, implemented a separate tax rate for gold and other precious commodities of about 3% and 0.25% respectively, to mark a clear distinction between the rich and poor. The entire tax structure was at first formed without even thinking about the price differences it would bring on, the purpose of GST was to reduce the price of goods and services but poor implementation meant people had the power to increase the prices of goods as a result of GST. Even educational institutions introduced fee hikes across the country in the excuse of GST and price hike. Though the government realized the flaws and changed it a few times after that, the term GST was given a negative connotation, and  the revolutionary idea of the Vajpayee government, laden with thirteen years of rich research, basically went to the grave.

Today, GST is proving to be worthy with annual changes and the recent changes targeting middle class. However, it was an idea that had the potential of striking a perfect balance if introduced with a bit of care and thought process. Instead, the government clubbed it together as a part of a streak of economic reforms. GST at first had addressed all the concerns of the super-rich class, now a few of the problems faced by the middle class have been looked into and maybe before the next election, the grieving issues of the poor would be taken into consideration and then a few other changes would be made in the tax structure.

GST undoubtedly has a lot of potential to perform yet still, perhaps the current government would have to its credit the coupling successes of both removing black money from the markets and introducing revolutionary tax reforms at the end of 2019. Time and a close introspection of the needs of the population will play a crucial role in determining its fate.

Picture Credits: Patson Legal

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