On Thursday, Pawan Khera, Chairman of Media and Publicity (Communications Department) for the All India Congress Committee (AICC), sharply criticised the Modi government’s implementation of the Goods and Services Tax (GST), calling it a tool to extort money from the poor and middle class. Launching a scathing attack on the BJP government, he questioned the GST system. He stated that the once-promised “Goods and Simple Tax” has instead turned into a “Gabbar Singh Tax” under the BJP government.
Khera criticised the government for celebrating record-breaking GST collections while giving significant corporate tax cuts. In 2019, the government slashed corporate tax rates from 30% to 22%, costing the exchequer an estimated Rs 2 lakh crore. In contrast, tax collections from GST have been rising steadily, with a 177% increase in the last five years. Khera questioned why the government continues to burden the common people with high GST rates while offering lucrative tax breaks to large corporations. Khera argued that the Modi government’s economic policies are designed to benefit the wealthy, claiming that the GST burden disproportionately affects the poor and middle class. He highlighted that nearly 64% of total GST collections in 2021-22 came from the bottom 50% of the population, while only 3% was contributed by the top 10%. He criticised the current taxation system for its emphasis on consumption taxes, which, according to him, hit the economically disadvantaged the hardest.
GST Hits Farmers Hard
In a scathing criticism, Khera pointed out that even the country’s farmers are not spared by the GST system. According to government data, 36 farm-related items, including tractor tyres, fertilisers, and irrigation equipment, are taxed under GST. Khera lamented that this has increased input costs for farmers, further diminishing their income.
The current GST structure includes nine different tax rates, ranging from 0% on essential items to 28% on luxury and sin goods. The complexity increases further with additional cess rates on certain products, such as vehicles, luxury items, and tobacco. According to Khera, this convoluted tax structure makes it far from the “simple” tax system originally promised by the government. He pointed out that the Congress party had long advocated for rationalising GST rates into a single rate, as practiced in many other countries. GST was originally designed to simplify taxes like VAT and Sales Tax with the idea of “One Nation, One Tax.” Pawan Khera reminded the public that former Prime Minister Dr Manmohan Singh started discussions on GST but stressed it should be carefully planned before implementation. Khera pointed out that in 2017, Dr Singh had expressed concerns about rushing GST without proper preparation. He criticised the BJP for ignoring these warnings, resulting in a GST system that failed to be as simple as promised.
Call For GST 2.0
As part of the Congress party’s manifesto for the 2024 Lok Sabha elections, Khera called for a refreshed and simplified version of GST, which he described as “GST 2.0”. He stressed that this new version should lessen the burden on ordinary citizens and make the tax system truly simple. He urged the Modi government to adopt the ideas proposed by Congress in its manifesto and bring about the much-needed reforms in the upcoming Union Budget.