Asserting that the present Goods and Services Tax (GST) structure has ‘wrecked the economy,’ former Finance Minister P. Chidambaram said on Friday that it needs to be scrapped and replaced with a simplified GST 2.0.
Addressing a joint press conference with Congress communications chief Jairam Ramesh on the fifth anniversary of the GST’s launch, Mr. Chidambaram said the indirect tax, in its present form, had led to a complete breakdown of trust between the Centre and the States and destroyed the micro, medium and small enterprises (MSME) sector that provides 90 per cent of the jobs. Its complexities had forced the government to “change the rules every two days”, he said.
The principal Opposition party also also demanded consultations with all stakeholders and an all-party meeting to work out a new simple law.
“The first thing that has to be done is to get rid of these six rates. You have to have a single low rate, that is GST. The world over, that is GST,” Mr Chidambaram told reporters.
“It has to be a single low rate, that is a starting point. If you make an error at the starting point, your entire travel on the path will be wrong. So let us scrap this GST, let’s go back to the drawing board and start with a single low rate. Then let’s work out the further steps,” he added.
Noting that there were serious problems about the tax levied by two authorities – the Centre and States – the former Finance Minister said his party completely rejected the current GST regime.
“The GST had serious birth defects. In the last five years, these defects have only become worse and all those touched by GST have been seriously injured,” Mr. Chidambaram said, adding, “the skewed formula on voting rights of the Centre and the States has been used by the Centre to push through decisions that are bitterly opposed by the States including, privately, by BJP-ruled States.”.
Mr. Ramesh added, “The GST Council is functioning like an extension of the Prime Minister’s Office. There is bulldozer politics outside and there is bulldozer inside the Council.”
The former Finance Minister made it clear that the “so-called GST” that was in force today was not the taxation regime that the the UPA government had envisaged. “The GST that we have today is a complex web of many rates, conditions, exceptions and exemptions that will leave even an informed taxpayer completely bewildered. Not all registered dealers are informed taxpayers; as a result, they are at the mercy of the tax-collector,” he said.
Separately, former Congress chief Rahul Gandhi tweeted that Congress’s notion of GST being a “Genuine Simple Tax” was turned into a “Gabbar Singh Tax” by the Narendra Modi government.
“Congress’ Genuine Simple Tax was turned into Gabbar Singh Tax by the BJP. Six rates, 1000 plus changes in 1,826 days! Ease? It’s a nightmare to do business, especially for MSMEs. Congress will revive business and jobs with GST 2.0 - single, low rate, shared fairly with States,” Mr. Gndhi tweeted with the hashtag #5YearsofGSTMess.
