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All states except TN on board GST bandwagon, Congress still adamant

Akash Bisht | Updated on: 10 February 2017, 1:49 IST
The support
  • Finance Minister Arun Jaitley says all states except Tamil Nadu are now supporting the GST Bill
  • He said this after a meeting of the Empowered Committee of State Finance Ministers in Kolkata
The setback
  • This has come as a setback to the Congress, which has been opposing the GST in the Rajya Sabha
  • Congress leaders are still adamant that they won\'t let it pass, till the govt bows to the party\'s three demands
More in the story
  • The numbers game in Rajya Sabha - can the NDA get two-thirds support despite Congress opposition?
  • Tamil Nadu\'s concerns, and Jayalalithaa\'s memorandum to the PM

Union Finance Minister Arun Jaitley on Tuesday, 14 June, declared that all states, bar Tamil Nadu, are lending support to the proposed Goods and Services Tax (GST) Bill.

After attending the meeting of the Empowered Committee of State Finance Ministers in Kolkata, Jaitley said only Tamil Nadu had raised certain objections, while the other states had unanimously decided to back the NDA on the GST Bill during the monsoon session of Parliament, which begins on 25 July.

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Jaitley held discussions with finance ministers of 22 states, and representatives of seven others

Jaitley held discussions with the finance ministers of 22 states, and representatives of seven others, convincing them about the benefits of the unified tax regime.

His announcement has come as a setback for the Congress, which has been resisting BJP's plans to passing the GST Bill, which could eventually unleash a series of reforms expected to boost the economy.

Congress objections

The government is planning to formally implement GST nationally by 1 April 2017, and is waiting for the Rajya Sabha to clear the Bill so that it can pass the supporting legislations.

However, the ruling combine is up against the Congress, which demanded the inclusion of three changes in the proposed legislation before it gives its nod. The Congress has been demanding that the GST rate be capped at 18%, the scrapping of a proposed state levy and an independent mechanism to resolve disputes on revenue sharing between states.

While the government has agreed to incorporate the last two demands, it has firmly opposed the 18% cap, claiming that each time the GST council suggests a changes in the rate, it will have to make amendments in the Constitution, which is 'difficult to accept'.

Govt has opposed Cong demand for an 18% cap, saying Constitution will have to be amended repeatedly

In Kolkata, Jaitley claimed that there is consensus amongst all states on no GST tax cap.

Replying to the government's claims, former Finance Minister and veteran Congress leader P Chidambaram had said: "GST is being delayed only because the government is unwilling to step down from its stubborn position. We have pointed out three flaws in the Bill. The Chief Economic Adviser has virtually endorsed us - not in so many words - when he said that 1% was retrograde."

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He went on to add that Jaitey was silent on the Dispute Resolution Mechanism, and agreed that 16% or so would be sufficient for a revenue-neutral rate. "So, I think there is broad support among the business community and among the people. These criticisms are legitimate and these flaws must be fixed before you pass the Bill. I simply do not understand why the government is adamant and is not willing to accommodate these three criticisms or flaws," Chidambaram had added.

Rajya Sabha numbers game

Meanwhile, buoyed by the results of the recently-concluded Rajya Sabha polls, the saffron party is planning to aggressively push the passage of GST, which has been stuck in the upper house.

The Bill was passed in the Lok Sabha in May 2016, wherein the Congress and its allies staged a walkout, making it easier for the government to get two-thirds support in the lower house.

Banking on the support of its allies and regional outfits, the BJP is hoping that the monsoon session will finally see the contentious legislation getting the stamp of approval from the upper house.

Out of the 245 members of the Rajya Sabha, the NDA has a house strength of 74, while the UPA stands at 71 and regional outfits have 89 members. The seven members nominated by the BJP are also expected to lend support to the NDA, taking its tally to 81.

NDA is assured of 81 Rajya Sabha members' support, but needs 84 more for a two-thirds majority

It desperately needs support of regional outfits to ensure a two-thirds majority - 165 votes out of 245 - to pass the crucial legislation.

With JD(U), SP, BSP and TMC among other regional outfits promising support, the Congress could find itself isolated in the Rajya Sabha. Despite the Opposition's numeric advantage over the NDA, the likelihood of GST getting a stamp of approval from the Rajya Sabha is now quite high.

'Let's see how they pass it'

In the past, the BJP and its partners have repeatedly accused the Congress of being 'obstructionist', and putting petty politics over national interest. The Congress ridiculed these charges and claimed that it was the UPA that conceived the GST, and faced similar opposition from the BJP when it sought support in passing the Bill.

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"This is not the first time they have said so. The GST Bill was conceived by the Congress government, and at that point of time, the present PM, who was then CM of Gujarat, was ardently against the Bill, besides other NDA leaders. The Congress party is not against the GST Bill as such; we want some amendments incorporated in the present GST Bill. We are insisting on those amendments, and as and when the government is ready with our amendments, we'll gladly pass it," said the Leader of the Opposition in the Rajya Sabha, Ghulam Nabi Azad.

Congress leaders claim that a solution could have been worked out if the BJP had not 'launched personal attacks on the Gandhis' on the AgustaWestland deal. "We will continue to disrupt Parliament and not let the government have its say. Let's see how they pass it," said a Congress leader.

Experts say to thwart Congress's plan, the government could go for a division, wherein each party could vote separately, which could eventually lead to the passage of the GST Bill.

Tamil Nadu's concerns

Meanwhile, AIADMK supremo and Tamil Nadu Chief Minister J Jayalalithaa met Prime Minister Narendra Modi and submitted a memorandum voicing her concerns with the unified tax regime.

"GST impacts fiscal autonomy of states, and huge permanent revenue loss is expected for a manufacturing state like Tamil Nadu. Before a constitutional amendment on the GST is taken up, Centre should strive for a broad consensus on important issues like compensation period and methodology, revenue-neutral rates, floor rates with bands, commodities to be excluded from GST, so that state's concerns on the loss of fiscal autonomy and permanent revenue loss are allayed," read the memorandum.

Edited by Shreyas Sharma

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First published: 15 June 2016, 2:52 IST