 "GST a Congress Bill, party's negativism hurting economy: Jaitley")
Jaitley said the Congress might be upset with the government for ‘political reasons’ but it must “accept and seriously introspect” that negativism and its “obstructionist tendencies” would hurt the country and the economy.
Giving a point-wise rebuttal to all eight instances of dissent put forth by the Congress, he said the present government has not made “any significant modifications” to the GST legislation accepted by the previous UPA government and it has also been supported by the Congress-ruled states. Acknowledging that there might be merit in Congress' demand for an 18 per cent GST rate, he said this needs to be decided by the GST council and the only significant change introduced in the present Bill was “to bring a consensus between manufacturing and consuming states”.
“Is it only out of an obstructionist attitude that the Congress party has adopted a negative role? Since Parliament is not functioning and there is no way to clarify these points before the same, I am constrained to place the above facts in public domain,” Jaitley said in a post on his Facebook page.
Rejecting the Congress proposal for raising the states’ voting power in the GST council to three-fourth, Jaitley said, “Is it the Congress’ proposal that the Union should cease to economically survive? Is it their proposal that the Centre should have no say in the system of national taxation? The Congress appears to have made this proposal without adequate application of mind.” Jaitley further said, “The Congress party and its leader may be upset with the electorate for the 2014 verdict. The party should accept and seriously introspect after having ruled the country for the longest period of time, that negativism hurts the country. Should its obstructionist tendencies inflict an economic injury on the country?”
Stating it was a Congress-led government that proposed a GST in the 2006-07 Budget and the Constitution amendment was also piloted by the UPA, Jaitley said changes suggested by the empowered committee and the standing committee at that time were also accepted by the UPA government. For GST rollout from April 1, 2016, parliament needs to approve the Constitution Amendment Bill in the current monsoon session, ending August 13, after which half of 29 states would need to clear it. The GST seeks to replace all existing indirect taxes.
However, Parliament proceedings have been repeatedly getting disrupted over issues like the Lalit Modi controversy and the Vyapam scam for the past two weeks. In the Facebook post titled ‘Dissent or disruption – The Congress party’s position on GST’, Jaitley said the suggestions being made now by Congress members were never part of either Mukherjee’s Bill or that of Chidambaram’s proposal. Jaitley said the rationale of the bill is to simplify the complex indirect tax structure in the country. "The present system involves multiplicity of taxes, absence of uniform rates of taxation, and the cascading effect of ‘tax on tax’. It is also an impediment to the seamless transfer of goods and services across the country," he said.
The GST Constitution Amendment Bill has been cleared by the Lok Sabha and is waiting for nod of the Rajya Sabha, where the ruling NDA does not have a majority.
The report of the Rajya Sabha select committee was tabled in parliament last month. The committee had suggested to compensate the states fully for five years for any revenue loss for GST rollout. However, the Congress, the All India Anna Dravida Munnetra Kazhagam and the Left had given dissent notes on the same. Jaitley said the proposal for introduction of GST was first mooted by former finance minister P Chidambaram in his Budget for 2006-07.
"After detailed deliberations and negotiations in the Empowered Committee of State Finance Ministers, the 115th Constitution Amendment Bill, 2011, was introduced by Pranab Mukherjee, the then finance minister," he said, adding the Bill was referred to the parliamentary standing committee, which gave its report in August 2013.
The Bill, however, lapsed with the dissolution of 15th Lok Sabha. Thereafter, the NDA government again held negotiations with the Empowered Committee and after an overwhelming consensus, introduced a bill incorporating certain changes which had also been recommended by the Parliamentary Standing Committee. The bill was approved by the Lok Sabha and when it came to the Upper House, it was referred to a Select Committee which has recommended a five-year compensation to the states which suffer any revenue loss on account of introduction of GST, he said.
Giving a point-wise rebuttal on the Congress party's dissent note to the Select Committee's report on GST, Jaitley said the Congress' suggestion of GST rate not exceeding 18 per cent was not part of the bill from Mukherjee.
"The rates of taxation are usually not fixed in the Constitution... The rates have to be recommended by the GST Council depending on factors such as economic conditions, revenue buoyancy etc and incorporated in GST laws.
"There may be some rationale in the rate recommended by the Congress party. However, this decision has to be taken by the GST Council and cannot be part of the Constitution itself. The rates will vary depending on a host of factors," he said.
On Congress' demand that the expression 'supply' should not apply to goods and services supplied by one unit of a firm to another of the same firm, Jaitley said there was no such proposal in either Mukherjee's bill or in the proposal approved by Chidambaram.
The FM said the Congress' proposal that the share of local bodies in the revenue should be part of the proposed Constitution amendment, runs contrary to the 73rd Amendment of the Constitution, which provided for setting up State Finance Commissions with a mandate to make such recommendations.
Also, its proposal that a state or a Union Territory with or without a legislature having a population of not exceeding 20 lakh should be given a special status was never Mukherjee's or Chidambaram's.
"The Congress wants Goa to be a special category state under GST, but Goa has the highest per capita income in the country," he said.
On the Congress demand that electricity, tobacco products and alcohol for human consumption should be given the same treatment as petroleum in the Amendment bill, he said this was not a proposal mooted by any of the Congress Finance Ministers.
Rejecting the Congress suggestion that voting representation of the states in the GST Council to be increased from two-thirds to three-fourths, he said this would reduce the Centre's voting power from one-third to one-fourth.
"This is contrary to the decision Chidambaram specifically took on April 30, 2013... In fact, the Congress proposal would mean that if all the states get together and decide that the Centre should have a lower GST rate, they could deplete revenues of the Centre almost completely," he said.
India, Jaitley added, is a Union of States. "Is it the Congress proposal that the Union should cease to economically survive... The Congress appears to have made this proposal without adequate application of mind," he said.
Jaitley said the power of deciding the modalities of adjudication and settlement of disputes in the present bill is with the GST Council.
"Political issues have to be settled politically and not by judges," he stressed.
The Congress has asked for deletion of a two-year transient provision which provided for an additional tax of 1 per cent to be credited to the exporting state. "This provision has been added in order to allay the fear of manufacturing states which felt that they would initially lose some revenue. This is based on a unanimous decision of the Empowered Committee to which all Congress-ruled states have agreed," the Minister said.