To Rahul Gandhi’s single-slab GST idea, Union Minister Arun Jaitley said
that the single-slab system will not work for India.
He added while there would be scope to merge
some of the mid-category tax slabs depending on the collections going up, but a
single-slab system will not work for India.
"Rahul Gandhi has been advocating a single slab GST for India. It
is a flawed idea. A single slab GST can function only in those countries where
the entire population has a similar and a higher level of paying
capacity," Jaitley wrote in a Facebook post on completion of one year of
the Goods and Services Tax (GST )
"Being fascinated by the Singapore model is understandable but the
population profile of a state like Singapore and India is very different,"
he said adding that while Singapore can charge 7 per cent GST on food and on
luxury goods, that model won't work here.
"Since GST is a regressive tax, the poor have to be given a
substantial relief. Thus most food items - agricultural products and the aam
aadmi (common man) used products have to be tax exempt. Some others have to be
taxed at a nominal rate. The others could be taxed higher.
"Eventually, as the collections improve,
many more items from the 28 per cent category can possibly come down. Only sin
products and luxury goods can remain there," he said.
"In a move towards the single tax system,
the UPA asked the states to abolish the Central Sales Tax (CST). It promised
the states that it would give them compensation in lieu of the CST for a
certain number of years.
"The states acted accordingly, abolished the CST and the Central
government owed the states several thousand crores as CST compensation. When
the states demanded CST compensation, the Centre would look the other
way," he said.
Jaitley added that when he took over as the
Finance Minister, he cleared all the arrears of CST in order to bridge the
trust as the states had declared that they would discuss GST only if past CST
compensation is paid.
"The CST compensation was paid. The states were then willing to
come to the table and move further on the GST," he said.
Jaitley also said after he took over, he agreed to
pay to the states, after discussing in the GST Council, a 14 per cent increase
of revenue for the first five years for any loss of revenue and the states
jumped for this proposal.