It was supposed to be a tryst with a new indirect tax regime moment. But Prime Minister Narendra Modi took his address, during the function in Parliament’s Central Hall to launch the Goods and Services Tax (GST), to quite another level. His eloquence at speeches is well known, as much as his ability to pepper them with symbolism, analogies and acronyms – and the 50-minute-long address on the night of 30 June was yet another example.
No wonder then that “Good and Simple Tax”, as the Prime Minister interpreted the acronym for GST, is already doing the rounds.
Even the symbolism of the mega rollout “at the stroke of the midnight hour” wasn’t lost on the nation.
But did Modi live up to the hype created around the mega rollout? Do his words need a closer look? Yes, they do. Here are five things worth taking note of.
1. GST Is ‘Social Reform’. How?
The GST, as a single indirect tax, has replaced the earlier system of multiple indirect taxes – making way for a pan-India regime. It is at best an “economic” reform. But in his speech, delivered in Hindi, Modi emphasised how the new taxation system will uplift the poor, calling it a “social” reform. The only solace to the poor in his words – “prices won’t go up”.
Modi did not explain how the GST will make things easier for the poorer sections of the country. One needs to perhaps wait for the full rollout of the new regime. But it is still hard to foresee what the Prime Minister expects the GST to do. Or is he relying on Karl Marx’s theory of economy as the base and everything else as superstructure? Changes in economic relations, Marx had argued in his famous Communist Manifesto published in 1848, are almost always followed by other changes.
2. Remember Einstein?
German-born physicist Albert Einstein made his way to India’s Parliament because of his difficulty in understanding income taxes. That’s right. Modi, in his address, said:
Apparently, there’s no record of Einstein saying that, except for the word of his trusted tax accountant Leo Mattersdorf to TIME magazine in 1963. Eight years after the physicist’s death, Mattersdorf recalled Einstein as saying, “The hardest thing in the world to understand is income taxes,” during lunch at his Princeton home. Several versions of that quote have been used over the years.
In the same breath, Modi said Indian states had 500 taxes. Quite a bit of exaggeration there, too! Did we not hear our Finance Minister Arun Jaitley giving a more modest number, minutes before the Prime Minister’s speech?
3. Sardar Patel, GST and National Integration
The Prime Minister went for an unusual analogy to drive his point home about a single market under the GST regime. So much so that he said that the new tax reform will lead to “national integration”.
Yes, Sardar Vallabhbhai Patel played a role in the integration of the country after Independence, by convincing the rulers of the various princely states to accede. And now, 70 years on, Modi is credited to have set in motion a path-breaking change in the indirect tax regime. We are on course to become a single market, definitely. But national integration? Let us hope so.
4. Leh and Lakshadweep as New Markers?
There’s no doubt how oft-used the phrase “Kashmir to Kanyakumari” is to show the length and breadth of the country. But Modi is not one to go for the regular, is he? This is what he went for instead:
On one hand, his decision to not utter the word "Kashmir" may have been deliberate, considering that the state has not decided yet on making a transition to the GST regime. But isn’t Leh part of the state of Jammu and Kashmir?
But okay, let’s concede that “Leh to Lakshadweep” has a nice ring to it and sounds as pleasing as Kashmir to Kanyakumari.
5. Good and Simple
Finally, let’s go back to talking about how the GST is actually a “good and simple tax”. Really, in its present form? ‘Good’ we get, as it will bring more and more businesses into the tax net and end the system of taxes on taxes. But ‘simple’? We’re not so sure!
There are seven tax slabs – and the document on rates runs as long as 213 pages.
Let us just hope the single tax regime does not result in a multiplicity of litigations!
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