‘GST spurring fresh tax terrorism,’ says former CEA Arvind Subramanian

Ground actuality: Mr. Subramanian stated except GST charges are raised on some gadgets, income development will likely be a problem. File image
| Photo Credit: M. Vedhan

Former Chief Economic Adviser (CEA) Arvind Subramanian, who authored an official report on the best 15.5% revenue-neutral charge for the Goods and Services Tax (GST) regime, stated he isn’t very hopeful of a simplification of the complicated, multiple-rate construction of the oblique tax, and lamented that the GST period has unleashed a contemporary reign of “tax terrorism” throughout the nation.

“We don’t just need rationalization, which we do need, but we need an increase in the rate. We brought the rate down from 15.5% to 11% but the GST Council has become a Council that only discusses rate cuts. It has become a rate cutting committee and an exemption granting committee, and part of it is because of the of the compensation [to States] that happened, they became very lax but that phase is over,” he famous on Friday (November 29, 2024).

Speaking at a session on ‘The GST Story: Whither Next?’, hosted by the Centre for Policy Research, Mr. Subramanian stated except tax charges are raised on some gadgets, income development will likely be a problem.

“We thought the advantage of the GST Council is that, because if States were handling this on their own, if they raise rates, they would face political costs. In the GST Council, you can always blame the GST Council for raising rates, and that political economy dynamic hasn’t worked out. And I am very despondent,” he remarked.

Citing individuals’s experiences with the GST regime, Mr. Subramanian stated one thing in regards to the GST has inspired extreme tax calls for. “In the Indian system, tax terrorism and excessive demand was always a feature, but under the GST, it seems to have gone up. I don’t understand this fully, but I think because the GST gives more data, people think that governments think that they have greater legitimacy, because somehow they have more data and they say, ‘Oh, there’s more evasion’.”

This ‘tax terrorism’ that the GST has launched is one thing that ‘we really have to focus on’, the previous CEA cautioned.