West Bengal Finance Minister Amit Mitra has called for a three-day session of all state finance ministers to overhaul the framework of the Goods and Services Tax (GST). In a statement, the state’s ruling Trinamool Congress said, “Bengal Finance Minister Amit Mitra has called for a three-day session of all finance ministers to overhaul the framework of the Goods and Services Tax, the design of which is faulty and is one of the reasons for the economic slowdown in the country today.”
“In an interview, Mitra, who is also chairman of the committee of empowered finance ministers, said there were four points behind why the GST had failed since the three years that it has been implemented. One, the entire design was faulty: there were no pilots done, no data tests, no trials. And this when, for the first time in the history of the world, the largest tax reforms were taking place,” the statement further read.
“The laws and rules were faulty; there were frequent change in rules, and everybody lost, both the business and IT sectors. The second point is the complete inability to cope with what was happening. Number three point is there were frequent changes in the rate structure per item. The IT people were at a loss, as they too have to make frequent computer adjustments. And fourth is that the Centre-State coordination was completely lacking,” it added.
Mitra, elaborating in the statement why GST is a failure, said, “To substantiate why GST has been a massive failure, it is interesting to note that in 2018-19, approximately Rs 30,000 crore were to be collected from GST, both States and Centre together. But what was collected? Rs 24,000 crore. This shortfall of Rs 6,000 crore a huge 20 per cent because the whole system is faulty.” The state finance minister also said that the entire GST mechanism needs to be restructured.
“The key point for a solution is we need to restructure the entire GST mechanism, which is not happening. The response is knee-jerk. At the GST council meetings, everybody fights over what rates to reduce, what rates to increase because their states are involved. And the last Govt of India meeting of the GST council ended up by saying at the end of February 2020, they will not have enough money to pay compensation to the states,” Mitra said.
The statement further read, “In August 2019, a letter was written to FM Nirmala Sitharaman about the increasing number of fraudulent transactions in GST. So the time has come to overhaul, in collaboration with each of the state finance ministers in a federalist polity, where we put our heads together to restructure the GST policy for the sake of the small and medium enterprises and the businesses of the country.”