Congress leader and former Union Finance minister P Chidambaram on Saturday said that the goods and services tax (GST), which became effective from Saturday, will lead to inflation and asked what precautions the government has taken to contain that. Addressing journalists at his residence in Sivaganga district of Tamil Nadu, Chidambaram said the GST will put a heavy burden on the common man, as 80 per cent of all goods and services will bear higher taxes and prices.
This, he asserted, will have serious impact on small, medium and micro-businesses and entrepreneurs, besides inflation with multiple rates. “Small, medium and micro-entrepreneurs and traders will be affected severely because they have been denied time, although they sought more time to get ready,” he said. He maintained that the Centre hastily implemented GST and ignored the fact that traders and other sectors were not prepared for it. Opinion | GST rollout: Get Set for Turbulence. Click here to read.
Calling it a bad legislation, Chidambaram said what has been implemented now is neither the real GST that the Congress had designed, nor is it the ideal GST devised by experts. He said anti-profiteering provisions in its present form of GST will become detrimental on traders as it would be an instrument of harassment for officials. Calling these provisions a mockery, he said they were made by people who do not understand market economics.
Chidambaram, who included the GST proposal in the Union Budget for the first time during his tenure as a Finance minister in the Congress-led government, recalled the strong opposition by the BJP when the UPA had desired a “much better” form of GST. “They had protested against the GST tooth and nail. No one can deny this fact,” he said.
He said the GST concept devised by the Congress had a standard rate of 15 per cent tax, and no tax went beyond 18 per cent. Referring to problems on the compliance front, Chidambaram pointed out that many products — including petroleum, electricity and alcohol — have been kept out of GST. These sectors, which constitute up to 40 per cent of the economy, will have two taxation systems, he said.