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Mani Aiyar hits back at Arun Jaitley on GST Bill

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Mani Shankar Aiyar

New Delhi: Former minister Mani Shankar Aiyar has hit back at Finance Minister Arun Jaitley for his charge that Congress was “blocking progress” on the GST bill saying it was the BJP led by none other than Jaitley who had blocked passage of the bill during the UPA rule.

“Arun Jaitley’s Facebook post on Congress and the GST is wrong on every count. He begins by bemoaning the fact that while the GST (Goods and Services Tax) is a Congress initiative, it is now the Congress that is blocking progress. “What he forgets to add is that it is the BJP, led in this instance by none other than Jaitley himself, who blocked the passage of the 2011 GST Bill presented by then Finance Minister, Pranab Mukherjee, principally because Gujarat, under a Chief Minister called Narendra Modi, was dead opposed to it,” he said.

Referring to Jaitley’s article on Sunday squarely blaming Congress party’s “obstructionist” policies to stall the bill, Aiyar said “it was thus richly ironic that the man who taught us how to block matters is now bemoaning how well we have learned from him to do so.” A former union minister and member of the Select Committee of Rajya Sabha, he said the difference was that while Modi and Jaitley blocked without reason , the Congress has presented cogent reasons – of a general and specific nature – for its stand in the long dissent note it has incorporated into the Report of the Select Committee on Jaitley’s GST Bill.


Aiyar, writing his blog on NDTV, said as Jaitley made no reference to the general reasons advanced by the Congress “(for that would be to nakedly reveal his own absence of reason), let this column bring on record the principal general reason. Our Note of Dissent begins by saying that while we are in favour of a “simple and comprehensive GST” the present Bill is neither simple nor comprehensive.” The bill, Aiyar said, was not “simple” because it was pitted with so many exceptions, exemptions and compromises as to obscure the overarching purpose for which the Congress has been campaigning for a GST for more than a decade.

The Congress campaign was to enable a higher growth rate by making India a single common market where the sales tax levied on it is the same irrespective of the place of produce. This can only happen if every good and every service, without exception, comes within the ambit of the Bill. Hence our emphasis on the next two words: “and comprehensive”. If electricity and most petroleum products are kept out of the Bill’s purview, as Jaitley has proposed, obviously a huge input in the production of every type of good and service will be excluded. It is impossible to think of almost any product (except perhaps handlooms and handicrafts) that do not require electricity and petroleum products. Yet, Jaitley’s Bill does just that,” he said.

Secondly, he said, alcohol for human consumption is one of the most revenue-generating items produced. Yet, the liquor industry is riddled with malpractices because high taxes on liquor only open the door to ‘hooch’ and what is technically called ‘seconds’ – liquor that is siphoned out of sight of the taxwallah and sold in the black market. Therefore, including liquor and tobacco in the GST is an imperative of rendering the GST “comprehensive”. Jaitley’s Bill fails on that score, he added.  Jaitley, Aiyar said, admits that the Congress proposal to provide for an 18 per cent ceiling on GST has merit. Yet, he wants to leave it to the GST Council – a collection of State Finance Ministers – to decide the rate.

“There is naturally concern that in chasing higher revenues–which is arguably the chief concern of Finance Ministers–the temptation will be to take the GST as high as possible. That is why a Constitutional mandate to keep the rate moderate and reasonable was being attempted through the Congress amendment to provide a ceiling of 18 per cent beyond which the GST Council would not be authorized to go,” he argued. He said any indirect tax, including GST, is “regressive” – that is, it falls most on the poorest consumer. With direct taxes in the region of 30-33 per cent, an indirect tax like GST at 27 percent would be a huge burden for the poor to bear, the burden being the greater the poorer the consumer.

Jaitley’s colleagues in the Select Committee took recourse to the argument that a specific figure or percentage cannot be mentioned in the Constitution. He said Congress members pointed to the use of figures mentioned in the Constitution like with regard to profession taxes. The argument did not wash with the BJP. We then pointed out that they themselves, in this very Bill, were proposing an additional levy of 1 per cent. If it was valid, we said, to propose a specific percentage in one part of the Bill, how was it illegitimate to propose a specific percentage in another part of the same Bill? “Answer there was none because in the smug arrogance of its majority in the Lok Sabha, the BJP has closed its ears to straightforward logic

“Well, we will have to teach the Jaitley gang that in our parliamentary system a simple majority in the Lok Sabha is not enough to bulldoze their view; “Our strength in the Rajya Sabha exceeds theirs and they have to secure a two-thirds majority in each House, with half the members present and voting, to secure passage of a Constitution amendment Bill such as the 2015 GST Constitution amendment Bill,” he said. Aiyar maintained that Congress members of the Select Committee constituted one-seventh of the strength of the Committee.

“Our strength is nearly double that in the Rajya Sabha. With the help of just those three other parties (CPI-M, CPI and AIADMK) who submitted Notes of Dissent, we will have the required blocking one-third of the vote. Jaitley needs to redo his arithmetic. “We are not in a mood to oblige Jaitley. He can eat his heart out,” he said.