Whose interests will GST serve?

Modi dishes out one more lie to the people

The Goods and Services Tax Bill that amends the constitution to enable the GST reform was passed in the Lok Sabha on August 8, 2016. It was earlier passed by the Rajya Sabha. The bill will now be sent to state assemblies for ratification. A few states have already begun ratifying the same, and the government hopes to start implementation from April 2017.

The proposed GST will subsume various central (Excise Duty, Additional Excise Duty, service tax, Countervailing or Additional Customs Duty, Special Additional Duty of Customs, etc.), as well as state-level indirect taxes (VAT/sales tax, purchase tax, entertainment tax, luxury tax, octroi, entry tax, etc.). Once the Bill is passed, there will only be a national-level central GST and a state-level GST spanning the entire value chain for all goods and services, with some exemptions.

In his address to the nation on the occasion of Independence Day, Prime Minister Modi claimed that the GST will give security to small scale manufacturers and will benefit the consumer. 

This is the exact opposite of the truth.

The GST has been pushed by the bourgeoisie with the purpose of making it easier for the big capitalists with businesses all over India to move their goods across several states. Instead of paying taxes at multiple entry points, there will only be a single tax to be paid now.

This is the reason why almost all the political parties of the bourgeoisie cooperated to push this amendment.

Masses of ordinary people are already reeling under the burden of service tax. They are currently paying service tax on every service, even a service as basic as telephone. Taxes on services have risen from 12.36% to 14% with effect from June 2015 and further, to the prevailing 15%. Now, the GST rate is expected to be set at not less than 18%, which is going to put an even higher burden on the common man. Even the government and all its experts have to admit that the GST will result in inflation. So not only is the common man to pay a higher rate of tax for every good or service that is consumed but will also face rising inflation. So it will be a double burden on him.

Likewise, the small producers are going to be hit on two counts by the GST. Firstly, with the elimination of all barriers to trade, the big capitalists will be able to capture the whole country as their market. This will be at the expense of the small producers and traders in the various states. This is one reason some states like Tamilnadu and its ruling party the AIADMK have abstained from voting on the bill. Secondly, those small to medium manufacturers who were not under the excise net because their turnover was less than Rs.1.5 crore will now come under the GST regime. The low threshold limit for GST will bring more goods producers and service providers under the tax net. Additionally, the cost of compliance – the paper work and filing of returns is going to get more complicated. Experts agree that it is not within the scope of small manufacturers and service providers to have the required expertise in-house.

The Prime Minister and Finance Minister have been making tall claims about the outcome of implementing GST. According to them and their economic experts, the GDP of India will be boosted by GST and many more jobs will be created. Both these claims are totally baseless. In fact, the examples of several other countries show that implementation of GST creates an inflationary pressure on the economy and does not contribute to higher GDP.

Yet another time, the masses of ordinary people, workers and toilers, are being made to pay for the benefits accruing to a minority capitalist class.

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Sep 1-15 2016    Political-Economy    2016   

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This document, What Kind of Party?, was presented by
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