Chidambaram debunks Government stand on capping GST rate in statute

Dismissing Finance Minister Arun Jaitley’s charge that the Congress party was stalling passage of the Goods and Services Tax (GST) Bill for “collateral reasons”, he said the party was ready to cooperate with the government but has not heard from it after the meeting between Prime Minister Narendra Modi and Sonia Gandhi last month. 

“If the Government had constructively engaged with the Congress on its three principal objections since the beginning, the bill could have been passed by now,” he said. Chidambaram said Chief Economic Advisor Arvind Subramanian’s report on GST endorses two out of the three demands of the Congress — there should be no one per cent additional levy on interstate goods movement and the GST rate should not be more than 18 per cent. 

On Jaitley’s stance that the tax rate cannot be cast in stone by including in the Constitution, he said there is a precedent when Professional Tax rate of Rs 2500 was included in the Constitution. “There is a precedent in the Constitution where the Professional Tax rate was capped at Rs 2500. It is not unprecedented. If the Government does not provide a cap in the Constitution Amendment Bill than it must be provided in the GST Bill.

No tax can be levied without specifying the rate,” he said. In case of extraordinary situations like natural calamities, the government always has powers to bring a new levy. Chidambaram said the cap has to be in the Constitution Amendment Bill so that no government can increase the rate arbitrarily.

“The GST is a regressive indirect tax and there cannot be any justification for saying it should not be put in Constitution Bill. Bring another tax. You have the power under Entry 97 List-1. Increase income tax or impose a calamity tax,” he said.