THIRUVANANTHAPURAM: The Central Government has respond ed favourably to the state’s proposal for imposing an additional 10 per cent cess on SGST. Finance Minister Thomas Isaac will discuss the matter with Central Finance Minister Arun Jaitley on September 20.The state’s proposal is to mobilise funds for the massive infrastructure rebuilding exercise after the catastrophic floods. Isaac told Express he expects the Central Government and GST Council would support the noble cause. “We are hopeful though it may require an ordinance and a major change in the GSTN software. If tax-based cess is not possible, value-based cess can be considered,” he said.
The state expects to mobilise at least `750 crore a year through the cess on SGST.
B A Prakash, former head of the Department of Economics, University of Kerala, said he fears the cess would do more harm than good. “Already, the people are suffering from the exorbitant rise in petrol price and prices of essential commodities. The 10 per cent increase would further escalate prices,” he said.
According to Prakash, the government has several other viable options than making life even more difficult for commoners. “A drastic cut in non-plan revenue expenditure is the need of the hour. DA for government employees can be deferred. Also, pay revision should be made once in 10 years,” he said.
The fear of a price rise of commodities is unwanted, said Isaac. “Tax rates of several commodities are very low under the GST, when compared to the previous tax regime. The latest rate cut has caused around `100 crore loss in July’s SGST. Hence, the cess won’t create any considerable impact on the economy,” he said.
Some other economists pointed out the possibility of the Centre adjusting the cess in the monthly GST compensation. Also, the cess based on value of goods would cost more for the customer. In either case, the state would have nothing to cheer from the cess, they said.