NEW DELHI: A day after the passage of the 122nd Constitutional Amendment Bill in the Rajya Sabha, the ambience of trust, mutual praise and the conciliatory tone adopted by both the government and the Opposition seemed to evaporate.
Fault lines developed over Finance Minister Arun Jaitley’s refusal to commit that the next batch of Goods and Services Tax bills — the Central GST and the Inter-state GST – will not be brought in as money bills, making the Upper House’s role redundant. The bills are expected to come up in the Winter session.
While Jaitley has taken the view that he would be attracting ‘privilege’ motion by committing to curtail the power of the Lower House, declaring the nature of the legislation in advance, the Congress ratcheted up the issue claiming that it’s the only reason the government wants to bypass the Upper House.
The government gave in to two of the three key demands of the Opposition to get the GST Bill through in the Rajya Sabha. It totally removed the provision of 1% additional tax by the manufacturing states and made a partial provision for an independent dispute resolution mechanism in the Bill. However, a decision on the more contentious issue of 18 per cent ceiling for GST has been deferred. The Congress had to step back from its demand of including the GST cap after most of the states opposed the move and demanded a higher cap.
Senior Congress leader and Rajya Sabha MP Jairam Ramesh on Thursday asserted that none of his party-ruled States would agree to a GST rate of above “18 per cent”. That the party will not agree to the higher rate which could prove to be “inflationary”. “We’re in favour of a consumer-friendly GST,” Ramesh said, hinting a “political fight”.
Jaitley said a lower GST rate would result in deficit budget as the Centre was committed to compensate the states in the first five years. Ramesh asserted that it has been seen the world over that a lower or more reasonable GST cap not only helps in widening the tax base but also results in tax compliance. He cited the spike in revenue after VAT kicked in, to buttress his point.
The GST Council with the states’ representatives will decide on the cap in consultation with the Centre. The GST Bill will also have to be ratified by 50 per cent of the 29 States to become an implementable law. While the BJP/NDA is in power in 13 States, the Congress is in power in eight. Among the non-BJP/NDA, non-Congress States, except for Tamil Nadu, all the others are supporting GST hoping for a windfall gain.