The minister, in an article on ‘The GST Experience’ on completion of the first year of the rollout of the Goods and Services Tax (GST), also exuded confidence the GST Council would look into rationalisation of the taxation structure after stabilisation of the collections.
Jaitley, who was the Finance Minister when the GST was introduced, is currently minister without portfolio and is recuperating from a kidney transplant operation.
Rahul Gandhi has been advocating a single slab GST for India. It is a flawed idea. A single slab GST can function only in those countries where the entire population has a similar and a higher level of paying capacity.
Being fascinated by the Singapore model is understandable but the population profile of a State like Singapore and India is very different. Singapore can charge 7% GST on food and 7% on luxury goods. Will that model work for India?, the Minister questioned.
Since the GST is a regressive tax, the poor have to be given a substantial relief, he said, stressing that most of the food items agricultural products and the Aam Aadmi used products have to be tax exempt while some others have to be taxed at a nominal rate.
The others could be taxed higher. Eventually, as the collections improve, many more items from the 28% category can possibly come down. Only sin products and luxury goods can remain there.
There would also be a scope again, depending on the collection going up, to merge some of the mid category slabs but for that, we have to see the progress of the new tax regime and the possible upward movement in the collections, the minister said.
He further said that while Gandhi and former Finance Minister P Chidambaram have repeatedly demanded that petroleum products be forthwith brought within the GST, the finance ministers of the Congress-ruled States were against it.
When I speak to the Congress Finance Ministers’ in the States, they don’t seem to be ready for it. But what was the UPA’s own track record on petroleum products in the GST? The constitutional amendment proposed by the UPA permanently kept all petroleum products outside the GST, he said.
Jaitley further said that he used the inclusion of petroleum products as a bargaining issue with the States while conceding the Central Sales Tax (CST) and compensation paid to the States.
I worked out a formula that petroleum products would be included in the Constitution amendment providing for the GST but the council can decide the date from which to bring them into GST. The States agreed, he said.
He further said that when the GST was to be launched on 1 July 2017, the government was advised by the Congress to postpone it.