Except AIADMK, all parties support GST Bill

New Delhi: Barring AIADMK, all political parties on Monday supported the GST Constitution Amendment Bill in the Lok Sabha but asked the government to ensure that there is no adverse fallout on inflation and that states have some say in deciding the tax rate.

The Constitution (122nd Amendment) Bill, which was passed by the Lok Sabha in May 2015, was taken up again by the House to approve the changes made in it by the Rajya Sabha last week. The government had moved six official amendments, including scrapping of 1 per cent additional tax, to the bill which were approved by the Upper House.

Initiating a debate on the bill, Veerappa Moily of Congress said his party supports the proposed legislation which provides for ushering in a single indirect tax regime across the country by subsuming various taxes.

At the same time, he said the Centre should keep the tax rate low under the new GST regime and bring the subsequent legislations as Finance bills instead of Money Bills.

He said GST should not be in "vested interest" of Centre and states and the government should specify the "neutral agent" who will ensure that the common man does not become a casualty of the new indirect tax regime.

P Venugopal (AIADMK) opposed the bill, saying Tamil Nadu is a manufacturing and originating state which will suffer while consuming states will benefit.

The concerns raised by party chief J Jayalalithaa have not been taken into consideration by the Centre, he said.

He cited various issues raised by the party including that GST Council should not be a Constitutional body and petroleum products should be kept permanently outside the purview.

Moily said the 1991 reforms brought by then Prime Minister Narashimha Rao had made others come out with revolutionary thought on reform. He said the GST law could have come much earlier had there been a political consensus.

"Congress party will extend full support for implementing GST," Moily said, a remark which was welcomed by Prime Minister Narendra Modi and other members of the Treasury benches by thumping of the desks.

Complaining that the NDA government had always viewed the Lok Sabha as a "junior partner" and did not take the House seriously, Moily said when the Lower House passed the GST bill in May last year, he had demanded that Joint Select Committee of both Houses of Parliament be set up.

"You think Rajya Sabha was important. When Rajya Sabha demanded Select Committee you agreed. You think there are no brains in the House (Lok Sabha). We demanded 1 per cent removal, you bulldozed it. But you had to come down in the Rajya Sabha," the Congress leader said.

"Democracy is not only majority, but consensus of all parties, both inside and outside the House," he said.

"I must say states and Centre have a vested interest in this. Who will be the neutral agent? Who will be the loser? It is the common man who will be the casualty in this competitive attitude," Moily said.

On inflation impact of the GST, he said, it needs to be studied greatly because it is not a short term problem. As far as GST rate is concerned, he said it has to be low as it prevents distortion.

Citing an example, Moily said increasing rate from 10 to 20 per cent raises distortion by four times.

The rate should be like a bee which collects honey without harming anyone, he said, adding 18 per cent tax indicate some profit element to everyone.

Wondering what is there for a common man, Moily said, "GST is bonanza for central government, state government and business, which should be shared with the consumer...we need to engage people."

Malaysia which implemented GST last year has been witnessing protests as it has resulted in rise in prices. "There has to safeguard against inflation and corruption...RNR should be carefully calculated. Next GST Bill should be a finance Bill and not a money Bill," he said.

There is an opinion circulated that it will lead to one country, one tax but even after the implementation there will exist 38 taxes, the Congress leader said.

He also pitched for judiciary to be part of Grievance Redressal Mechanism to be set-up after the implementation of the GST. "Even the Standing Committee headed by Yashwant Sinha suggested that it should be headed by judiciary," he said.

On the April 2017 deadline, Moily said it is too optimistic to think that the entire process will be finalised within 10 months. "You have given a roadmap, but there is no flesh or bones," Moily said.

He said half-baked legislation brings in more difficulty and Congress when they brought VAT, the rate was kept low at 4 per cent.

While supporting the Bill, Kalyan Banerjee (TMC) said state revenues should not be affected in case of IGST and compensation should be paid in full for 5 years as the proposed amendment does not talk of full compensation.

Tax rates should be based on two principles - one that it should not be high and two, the tax rate should not be such that revenue of states should suffer, he said, adding GST Council should be formed as soon as possible and Model GST Law should be made public and discussed publicly.

"I have a request to Prime Minister that for every work done in the country, Prime Minister himself claims credit...Prime Minister forgets state executives worked hard so that Centre sees the face of success. Today, Prime Minister should say that because of Chief Ministers, Finance Ministers and all political parties, this GST BIll has been passed," he said.

Banerjee also sought a response to West Bengal Chief Minister and Finance Minister's demand for a special package to West Bengal.

Making an intervention, Deputy Speaker M Thambidurai said, "in relay race, the last person gets credit."

Supporting the Bill, Tathagata Satpathy (BJD) said the legislation will attack and erode the very independence of states. "We support GST in principle but we have moved amendments," he said.

Satpathy said the Prime Minister said "something about 'gau rakshaks' yesterday and he is also aware of problems that Chief Minister of a state faces, he said, "We should not leave GST to bureaucracy...I would urge the Centre to share clean energy fund with coal producing states."

Anandrao Adsul (Shiv Sena) said his party supports the Bill but octroi and cess should be worked out as it not only provides revenue but also helps movement of goods freely.

Citing an example, he said because of octroi, 26/11 terrorist preferred water route because of a threat of checks at the toll gates.

Supporting the GST bill, Jithender Reddy (TRS) said the tax rates should be kept low, while protecting the revenues of the states. He demanded that the Centre should release Rs 10,440 crore to the state on account of CST compensation.

P Karunakaran (CPI-M) said GST being a regressive tax, it would hurt the poor. Hence, the aim of the tax should be to minimise its impact on the poor.

While supporting the law, he sought to know from the Finance Minister as to how the states would raise their resources in the event of a catastrophe or a disaster.

Rajamohan Reddy (YSRCP) supported the legislation and also sought an assurance from the Centre that the state of Andhra Pradesh would be given the special status.

Tariq Anwar (NCP) said the government was "packaging" the GST as if it would do away with poverty, help check black money and also deal with unemployment. "If GST was so important a legislation, then why did they oppose it for so long? Was it a mistake on their part? Did they change their stance when they moved to treasury benches from the opposition," he asked.

Anwar also said that the government should first garner support from the Sangh affiliated trade unions for supporting the reforms in FDI and taxation.

Dharmendra Yaday (SP) said that a large state like Uttar Pradesh should have bigger say in the GST Council which will decide the rate and oversee implementation of the new indirect tax regime.

Prem Singh Chandumajra (SAD) said the implementation of the GST would ensure more revenue for the exchequer by checking tax evasion and give a boost to employment generation by promoting industrial activities.

Observing that while in the opposition, BJP had opposed the GST but now was keen for its passage, Jay Prakash Narayan Yadav (RJD) said that special care should be taken for the needs of the farmers and smaller states.

Sirajuddin Ajmal (AIUDF) demanded that there should be more clarity and transparency in the GST for the benefit of the industry.

Heena Gavit (BJP) said that implementation of the GST will help in raising India's ranking in the ease of doing business index of the World Bank.