The United Progressive Alliance (UPA) government’s effort to introduce the Goods and Services Tax (GST) looks uncertain, as the Bharatiya Janata Party (BJP)-led National Democratic Alliance is likely to continue with its opposition towards the GST Bill.
Even as the BJP today agreed to allow the government go ahead with the Civil Nuclear Liability Bill, sources in the BJP camp said the party wanted to act “tough” on the GST issue.
A meeting of the finance ministers of the BJP-ruled states took place this evening at the residence of veteran BJP leader L K Advani. The mood of the meeting was against allowing the government to accept the GST Bill. Just as the BJP had resisted the introduction of the value added tax initially, it will oppose the introduction of GST from April 1, 2011.
Madhya Pradesh and Uttarakhand — both ruled by the BJP — are likely to take the lead to cultivate support of various finance ministers on GST at the state finance ministers’ meeting to be organised in New Delhi tomorrow. It will try to lobby against the central government’s proposals, provisions and calculations on GST with Uttar Pradesh and Tamil Nadu, as both states hold the key in passage of the Bill, to be introduced in Parliament.
Earlier this month, speeches (copies are available with Business Standard) of Uttar Pradesh Commercial Tax Minister Nakul Dubey, Tamil Nadu Finance Minister K Anbazhagan, Karnataka Chief Minister B S Yeddyurappa, Gujarat Finance Minister Saurabh Patel and Chhattisgarh Commercial Tax Minister Amar Agrawal strongly opposed the GST, as its proposal strips states of financial independence and Constitutional power to impose taxes.
“Raghavji (Madhya Pradesh finance minister) is opposing the nature of the GST as proposed by the central government; it is anti-constitutional and in tomorrow’s meeting, he will strongly oppose it in its present form,” a source in the Madhya Pradesh government told Business Standard.
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“The revenue losses calculated by the state government will touch '2,217 crore by 2011-12 at 16 per cent GST as proposed by the Centre. The growth in service tax was 15.99 per cent during 1999-2000 which has now slipped to (-)16.74 per cent. It is an impractical approach on the part of the Centre to impose GST,” he said.
Raghavji had opposed the GST by contesting the calculations on tax rate growth and its nature. On August 4, the Gujarat finance minister had said, “We feel that concurrent powers for the Centre and states to legislate on goods and services would confuse matters further and nowhere has it been made explicit that whose writ would prevail in case of conflict.”
Similarly, Anbazhagan said: “Tamil Nadu will not lag behind in implementing beneficial tax reforms. We feel that the objectives of GST can be achieved without altering the basic structure of the Constitution by enacting separate legislation by each state in line with the national model. Thus, while we broadly support a transition to GST, we will not compromise on the autonomy of the states or basic Constitution framework.”