Second-Gen GST reforms needed for simplicity, equity, competitiveness

Streamlining rates and expanding GST coverage can enhance revenue and reduce distortions; political buy-in remains a key challenge

In my last column (Business Standard, September 12, 2024), I argued for initiating second-generation reforms in the Goods and Services Tax (GST) system to make it simpler, more transparent, and less cascading. Reforms are necessary to make the consumption tax system more comprehensive, less distortionary, and export competitive. 

Enhancing the revenue productivity of the tax system and reducing cascading in the consumption tax is important to achieve the aspirational goal of reaching the developed country status by 2047. Tax reforms tend to be more successful when the economy is on the upswing, as the risk of revenue