New Delhi: Opposition-ruled states, including Madhya Pradesh, Chhattisgarh, Delhi and Puducherry, will oppose any move to increase rates under the goods and services tax, said state representatives ahead of the GST council meeting in New Delhi that is scheduled to start at 2pm.
Brajendra Singh Rathore, Madhya Pradesh commercial taxes minister, said the state is not in favour of increasing rates.
Echoing his views, Delhi Deputy CM Manish Sisodia said the state wants lower GST tax rates and more compliance. “Increasing tax rates will be knee-jerk reaction and will impact consumers,” he said.
With GST cess collections insufficient to compensate states for the revenue losses incurred, the GST council had asked states to suggest measures for revenue augmentation. This included a relook at rates and cess and the exempted items.
However, any increase in GST rates may impact the common man because indirect taxes by nature are inequitable.
Chhattisgarh Commercial Taxes Minister T.S. Singh Deo said increasing rates should be the last option and the state doesn’t favour any such move.
“It is important to achieve realisation of whatever rates you have put in. There is so much slippage and corruption. When rates were cut, there was an expectation of better compliance. The focus should be to curb the loopholes,” he said.
However, states may agree to a proposal to increase cess on sin goods. Sin or demerit goods like aerated drinks, luxury cars and tobacco are taxed at the highest slab of 28 per cent and a cess is levied over and above this tax rate.
“There is no consumption. Unemployment is prevalent. Factories are not producing. There is no demand in the economy. If we increase rates, then who will buy the goods? We will not allow any rate hikes. We can still consider cess on sin goods,” said Pondicherry Chief minister V. Narayanasamy.
Maharashtra Finance Minister Jayant Patil, however, pointed out that the BJP government moved rate-cut proposals on various items to the GST council ahead of crucial state elections. “Because of the rate cuts, there is scope to increase rates,” he said, adding that the state has still not been paid compensation cess for the months of October-November.
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Without going into the merits of higher rates of GST or the CAA / pan Indian NRC, it is clear that federal impulses are asserting themselves. This is something Delhi will have to get accustomed to. People will have to be persuaded, not simply herded forward. Genuine cooperative federalism, adopted five years ago, would have led to better governance and faster economic growth. See how swiftly the notion of adopting Hindi as a national language to foster unity has been withdrawn.