West Bengal blows hot and cold on GST

By | August 31, 2016

The plan to roll out the goods and services tax (GST) hit a rough patch over the weekend after a last-minute show of brinkmanship by West Bengal.

The state, without putting forth any specific reason, abruptly decided to defer its plan to ratify the constitutional amendment enabling roll-out of GST.

While this is unlikely to derail the Union government’s plan to get 16 states to ratify the amendment, especially with 11 states approving it as of Monday, it could potentially make it difficult to manage consensus on the design of GST, especially since the centre and states are entering a crucial phase of negotiations on deciding, among other things, the GST rate.

Differences also remain on how to administratively control traders. Though both the centre and states agree that every trader should only be controlled by one tax authority, both are unwilling to cede control to the other. Besides, there are issues such as what the revenue threshold of traders to be exempted from GST should be.

These issues need to be resolved within the next three months and the supporting GST laws tabled in Parliament in the upcoming winter session if the centre wants to stick to its implementation road map of 1 April 2017.

Despite being a vocal supporter of GST, West Bengal chief minister Mamata Banerjee has decided to put on hold the ratification after initially deciding to do so on Monday, a move analysts claim is a bargaining tactic.

Trinamool Congress leaders said they needed more time to study what other states that do not have a Bharatiya Janata Party government were doing on GST, explaining the last-minute decision to withdraw GST from Monday’s list of legislative business.

State finance minister Amit Mitra had previously said Banerjee was supportive of GST from 2009, when she was the railway minister. After returning to power earlier this year, Banerjee pushed Mitra to sort out differences with the centre for rapid implementation of the proposed tax reform, but her U-turn is seen as a ploy to put pressure on the centre to restructure West Bengal’s outstanding debt of Rs.3 trillion.

Banerjee has also taken offence to the centre’s close monitoring of fund usage in social development schemes, calling it a “serious infringement” of the federal structure. On Friday, she threatened to take the battle to New Delhi by way of sit-down protests and rallies if the centre did not yield to the state’s repeated requests to restructure its debt and stop interfering with its social initiatives.

West Bengal’s flip-flop on GST evoked a sharp reaction from the BJP which called it “political opportunism”.

BJP national secretary Sidharth Nath Singh, who also shares responsibility for the state, while reacting to the development, said that the National Democratic Alliance government has already given the state Rs.2.52 trillion over its share of 14th Finance Commission funds.

“Trinamool Congress is known for its bargaining tactics. Mamata Banerjee is also known for being of a mercurial nature. Eventually, West Bengal will roll it out. It does not send a wrong message. In the long run, there will be one or two aberrations like in all such ambitious schemes, but it will not affect its roll out,” said Jai Mrug, a Mumbai-based political analyst.

“As far as Amit Mitra is concerned, I don’t see any repercussions of this. In fact, I feel within two-three months, all these issues will get sorted and you will see him leading from the front,” he added.

So far, the GST bill has managed to draw support across party lines. BJP-ruled Assam was the first state to ratify the bill and Nitish Kumar-led Bihar was the first non-BJP-ruled state to give its assent. Himachal Pradesh was the first Congress-ruled state to do so. Aam Aadmi Party-led Delhi has also ratifed the bill.

While Telangana is set to ratify the GST bill on Tuesday, Biju Janata Dal-led Odisha is going to hold a special session of the assembly to ratify the bill on 1 September. Goa is also set to call a special sitting on 31 August to ratify the bill. Arunachal Pradesh, too, has called for a special assembly session to ratify the bill whereas Andhra Pradesh is likely to ratify it during its monsoon session, set to begin in the first week of September. Uttar Pradesh and Rajasthan are expected to ratify the bill soon  Source-http://www.livemint.com [30-08-2016]

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