The government and the main opposition squared off over the Goods and Services Tax on Thursday, with Prime Minister Narendra Modi hailing it as consumer-friendly and Congress vice-president Rahul Gandhi blaming it for unleashing “a tsunami of tax terrorism”.
India’s new indirect tax regime has emerged as a big election issue in Gujarat, with the main opposition party seeking to tap into the BJP’s traditional vote bank among traders and small businessmen by playing on their apprehensions about the ambitious tax reform that was rolled out to some teething problems in July. The Congress has made the NDA government’s handling of the economy its main poll plank, in a bid to end the BJP’s 22-year reign in the state.
Addressing an international conference in the national capital, Modi said that the rollout of GST has resulted in the abolition of dozens of indirect and hidden taxes. “Now the consumer knows how much tax he has paid to the state government and how much to the Centre. The queues of the trucks on the borders now no longer exist,” he said. With GST, a new business culture is developing and in the long term consumers will be the biggest beneficiaries, the PM added.
“It is a transparent system in which no one can hurt the interests of consumers. Increased competition due to the GST will lead to moderation in prices. It will directly benefit poor and middle class consumers.”
{{/usCountry}}“It is a transparent system in which no one can hurt the interests of consumers. Increased competition due to the GST will lead to moderation in prices. It will directly benefit poor and middle class consumers.”
{{/usCountry}}Hours later, addressing the annual session of the PHD Chamber of Commerce and Industry in the capital, Rahul Gandhi said the GST is flawed in its structure and “punitive” in its design. It is forcing businesses to incur massive transaction costs that are destroying them, he added.
“It is creating a 21st-century computerised and connected license raj. The GST as this government has formulated has already unleashed a tsunami of tax terrorism and it is only going to get worse”, said Gandhi.
He accused the government of firing a “double tap” of demonetisation and GST at the heart of the economy. Making a pitch for micro, small and medium enterprises (MSMEs), the Congress vice-president said they receive “almost no bank credit” even though they account for 40% of India’s economic output and 80% of all non-agriculture employment. “The truth is even yesterday’s (Tuesday’s) bank recapitalisation announcement targets only India’s big corporates while throwing crumbs at MSMEs.”
Accusing the government of choking entrepreneurship, the opposition leader said, “Why does the government disrespect them (entrepreneurs) and treat them like thieves....Startup India is welcome for the economy, but it cannot be accompanied by Shut Up India in society.”