With reference to the editorial, “Not profitable” (December 2), I wholeheartedly support the view of this newspaper that the “anti-profiteering” provision in the proposed goods and services tax (GST) law would be against the interest of trade and industry. I would add that the proposal to make an “anti-profiteering” authority would be a great hurdle in promoting “ease of doing business”. It would be nothing short of a debacle.
On enquiry, I learnt that 18 per cent profit was tentatively suggested to be the limit above which it would be taken as profiteering. This has not been finalised but even considering this line shows how decadent the thinking can be.
First, such a provision would take away from a company all desire to reduce cost and become efficient and profitable. Second, companies such as SAIL, TISCO, which make profit and loss at different times depending on international demand for steel, would get eliminated if they are not allowed to make profit of any amount when the opportunity arrives. Third, it would throttle innovation. No company will invest in research and innovation if they cannot make a profit. How will they finance research, if they do not make sufficiently high profit? Fourth, a company cannot grow and so also the country if high investment is not made by either private or government companies. And last, all start-up companies would be ruined as they make no income for long and when they invent something they make a one-time large profit, that too, if they succeed at all.
If a company pays all taxes properly and abides by all laws, how can the government stop it from making any amount of profit?
No other country except one has this kind of law. Not the USA, UK, countries in Europe, Japan, China or Russia. Only Malaysia has it. The Empowered Committee noted this. Since when has Malaysia become the leader of thoughts in economics to our GST Council?
Let me also point out that the unjust enrichment law framed in 1989 still exists and has not been given a “quiet burial”, as the editorial states.
Sukumar Mukhopadhyay, New Delhi
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