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After being stuck in a political logjam over the land Bill the Modi government has tabled in the Lok Sabha a Bill that aims to usher in one reform that political parties must support rising above petty politics.



After being stuck in a political logjam over the land Bill the Modi government has tabled in the Lok Sabha a Bill that aims to usher in one reform that political parties must support rising above petty politics. The Bill seeks to introduce a single goods and services tax (GST) countrywide to replace numerous existing Central and state taxes like excise duty, service tax, value added tax (VAT), octroi/entry tax and luxury tax. Tax collection would become easier and faster, and evasion harder as check-posts/barriers that delay the movement of goods would disappear. It is expected to cut inefficiencies in the production and transportation of goods, making India one market, thereby pushing the GDP growth by 1 to 2 per cent.

When the UPA introduced the GST Bill in 2011, the BJP-ruled states had opposed it. Now the Congress and other opposition parties are making jarring noises. The introduction of the Bill saw unwarranted protests and a walkout. Whatever objections any party or state has should be sorted out in Parliament or outside. Since the GST rollout, to be supervised by the GST Council, requires an amendment to the Constitution, cooperation of at least half the states is vital. The Modi government will have to use all tact and skill at its command to carry opposition parties and states along — by no means an easy task. However, if politics is kept aside, differences may not be irreconcilable. States have some genuine concerns since the GST limits their revenue and power to impose/increase indirect taxes. It gives the Centre an edge. The states, therefore, must be compensated adequately. But this should not be done by making too many exemptions, narrowing the base of the GST and diluting the expected benefits. States want liquor, petrol and diesel to be excluded from the GST ambit. 

Taxes have to be minimum, transparent, predictable and simple. For this, governments at the Central and state levels need to change, slashing unproductive expenditure and shrinking their role by withdrawing from areas which can be better handled by the private sector. Large governments burden the taxpayers. 

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