New Delhi : Calling both demonetisation and GST as failures of the government, the former Union Finance Minister Yashwant Sinha says an excellent concept like the GST is earning ill-repute because of the manner of its implementation.
The first thing we have to remember is that the GST rate slabs and the items for placement in each slab was not done on a clean slate. There was a central VAT (value added tax) that I had introduced in 2002 [as Finance Minister], and there was State VAT and all the items had already been fixed to one slab or the other. Now, the most important thing that the GST Council had to take into account was a revenue neutral rate — the idea being that there should be no loss to the exchequer, either of the States or the Central government.
If GST was to be a “good and simple tax”, it should have had one rate. Most countries that have adopted the GST have one rate. If that was difficult, then they should have probably fixed two rates, one for State GST and one for Central GST, if even that was not possible then they should have gone by my formula of merit, demerit and mean rate. But I don’t know what came over the GST Council and what kind of leadership was provided by the Finance Minister to the council that they went for five rates plus cesses that made it very complex.
On that very day, I said it would lead to lobbying, litigation, as here the logic is not clear.
So, when you go through all these mistakes that were made, the only conclusion you can come to is that the Finance Minister did not apply his mind.
Every rollback is an admission of failure, and a massive rollback of 177 items in one go only proves the scale of the failure.