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“Fool me once, shame on you. Fool me twice, shame on me. Fool me three times, shame on both of us.”
That is where India stands today with the Goods and Services Tax (GST) and its new festival-time reincarnation, “GST 2.0.”
The First Fool: The Promise That Betrayed
When GST was introduced in 2017, it was sold as a once-in-a-generation reform. It promised a seamless national market, the removal of cascading taxes, and a more transparent system that would benefit both consumers and producers. At least, that was the story.
The reality was harsher. GST turned into a blunt fiscal instrument that punished ordinary households while protecting the powerful. Instead of simplifying, it layered multiple slabs, carved out exemptions through lobbying, and concentrated compliance advantages in the hands of big business.
A study by the National Institute of Public Finance and Policy (NIPFP) found that the bottom 50% of Indian households shoulder the same GST burden as the middle 30%, with both groups bearing around one-third of the tax load. The richest 20% contribute only marginally more, despite cornering the lion’s share of national wealth (NextIAS). In effect, GST became a nearly flat tax system — regressive by design because the poor spend almost all their income on consumption, while the rich save, invest, and evade.
The Financial Express made it starker: the poorest 50% contribute a disproportionate 64.3% of GST revenues, while the richest 10% pay just 3.9% (Financial Express). That is not reform. That is robbery dressed up as modernisation.
The first fool, then, was the betrayal of promise. GST was never a people’s reform. It was a policy sleight of hand that shifted the fiscal burden downward. Shame on them.
The Second Fool: Complacency and Silence
Over the years, the evidence piled up. Traders complained of strangling compliance. Informal suppliers were forced into digital filings and invoice-matching systems without the bargaining power to resist predatory intermediaries. Consumers paid more for basics like food, fuel, healthcare, and education, while corporate profits soared.
Even the anomalies were glaring. In Karnataka, Labor Minister Santosh Lad criticised how GST applied 18% tax even on school uniforms and books, a cruel blow to poor households trying to educate their children (Times of India).
Yet the government refused to admit fault. Instead, it clung to propaganda: GST was “simplification.” GST was “modern.” GST was “nation building.” All the while, direct taxes on corporations and high-income earners softened, even as indirect tax dependence deepened.
This was the second fool — our silence as a society, our failure to demand accountability. When the design flaws became evident, citizens were told to swallow them as the price of reform. The middle class looked the other way; the poor had no voice in the tax councils. Shame on us.
The Third Fool: Diwali Gifts and Cosmetic Repair
Now comes the third act — the grand unveiling of “GST 2.0.” The government, smelling electoral risk, has discovered that GST in its present form is politically toxic. So, wrapped in festival cheer, comes a reform package announced in September 2025.
The GST Council slashed rates, consolidated slabs from four to two (5% and 18%), and exempted certain consumer items — toothpaste, shampoo, footwear, even life and health insurance (Reuters). It looks generous. It is marketed as benevolent. It is also electorally convenient.
But scratch beneath the surface. Experts estimate the changes will cost the exchequer ₹48,000 crore to ₹1 lakh crore in revenue losses (Times of India). Short-term relief may please consumers, but fiscal stability will be strained — and the government will have to make up the shortfall somewhere, usually by squeezing spending on social services.
The garment industry is already in revolt. Garments priced above ₹2,500 now face 18% GST, up from 12%. Manufacturers warn this will cripple small units and push semi-skilled workers into unemployment (Economic Times).
In Odisha, tribal kendu leaf pluckers — among the poorest of the poor — saw their GST reduced from 18% to 5%, but even then, demand has collapsed. They now demand a full exemption, because even a 5% tax makes their livelihood untenable (Times of India).
And the inverted duty structures remain untouched — for example, essential inputs in medical devices are still taxed higher than finished goods, creating perverse disincentives.
This is not reform. It is a festive facade, a political tactic to regain trust before elections. Shame on both of us if we accept this as real change.
The Way Forward: Beyond Cosmetic Repairs
A just economy cannot be built on the wreckage of regressive taxation. If GST is to survive, it needs radical redesign, not festive tinkering. Seven urgent steps stand out:
- Shift the tax burden upward — restore progressivity by raising effective direct tax rates on high incomes and wealth, closing loopholes, and reintroducing inheritance/wealth taxes on extreme concentration.
- 2. Exempt essentials fully — food, cooking gas, healthcare, education, uniforms, medicines, sanitary products must not carry GST.
- 3. Simplify slabs radically — no more than two, with lower thresholds for daily-use items and a higher rate on luxury consumption.
- 4. Protect small businesses — presumptive taxation, low-burden compliance schemes, and subsidies for digital onboarding.
- 5. Revive fiscal federalism — ensure revenue sharing with states is tied to public goods like health, education, and infrastructure.
- 6. Target big evaders, not small traders — redirect enforcement capacity toward corporate tax avoidance and large-scale evasion.
- 7. Lock GST revenue into social goods — ring-fence portions for nutrition, healthcare, public transport, and education so people see visible benefits.
Closing the Scroll
The GST was supposed to modernise India’s fiscal architecture. Instead, it became a tool of redistribution – not from the rich to the poor, but the other way round.
The government fooled us once with lofty promises. It fooled us again with stubborn denial. And now, it seeks to fool us a third time with Diwali gifts and cosmetic changes.
“Fool me once, shame on you. Fool me twice, shame on me. Fool me three times, shame on both of us.”
India cannot afford to be fooled a third time. We must demand not festival-time tinkering, but a just, progressive, redistributive tax system that funds dignity and public welfare. Otherwise, we are all complicit in our own betrayal.