The Kerala government’s decision to oppose the Centre’s move to increase GST rates for lottery, doing away with the distinction between lotteries run by the state and by private firms, could expose the BJP’s reduced influence in the GST Council.
The recent defeat of the BJP in three states has altered the composition of the Council, and the central ruling party will not be able to push its agenda unless a few regional parties back it.
The Finance Ministry has proposed to increase GST rates for lottery run directly by the state government to 28 per cent from 12 per cent in the GST Council meeting on Saturday. Kerala Finance Minister Thomas Isaac, who had played a key role in getting a differential rate on lotteries run directly run by state governments and those authorised by the state government but marketed by private distributors, said he is approaching all the state governments for support. “We will not compromise. I am writing to all state finance ministers, especially those of non-BJP ruled states,” he told The Indian Express.
Isaac said the Congress has already extended support. Kerala’s move is expected to be backed by five Congress-led governments, AAP government in Delhi, JD-S-Congress government in Karnataka, TDP government in Andhra Pradesh and TMC government in West Bengal.
Any decision in the GST Council requires 75 per cent votes to be approved. With the number of BJP-ruled states down the BJP cannot push its agenda without the backing of regional parties.
Removal of items from 28% slab may face hurdles
With the Congress winning three states, there could be an impact on power equations in the GST Council. As its decisions require 75 per cent votes to get approved, the new scenario could create hurdles for the BJP-led government’s move to remove more items from the 28 per cent category ahead of Lok Sabha elections —- a proposal that the party hopes might placate the trading community, its core support base.
Sources said the Union government’s move to cut rates for more items before the vote-on-account getting presented in February is also likely to be opposed by some states. If the proposal on lottery is put for vote, it would be the first time a vote takes place in the GST Council. The Council is expected to meet in January.
At Saturday’s meeting, the GST Council cut rates on 23 goods and services. Prime Minister Narendra Modi earlier this month indicated that his government wanted to ensure that 99 per cent things are brought within the 18 per cent GST slab.
Alleging that the Finance Ministry’s proposal to do away with differential rate on lottery is a move to “bring in lottery mafia” to the states, Isaac said the BJP government was trying to break the rules and precedence. “It will be fought out,” Isaac said.