Finance Minister, Arun Jaitley today said that a uniform tax rate will bring about seamless transfer of goods and services across country and it will help enable check tax evasion. The Finance Minister said GST Bill will empower the states and will increase revenue of states as well as the Centre. It will also help make some products cost less, he said.
There will be three enabling laws to bring about the GST regime - two by the Parliament and one by the state legislatures, he said. He said as a part of consensus, states felt that consumable alcohol had to be kept out.
The Finance Minister said the concept of GST Council is Indian federalism at play and two-thirds of voting power in the council belongs to the states.
Jaitley said the Empowered Committee of State Finance Minister was consulted from time to time as one of the contentious issues was to bring on board states which had reservations. Chidambaram said, "This is far too important legislation which will impact the next 50-100 years.
"The former Finance Minister said if government is not putting the 18 per cent cap on tax rate in the Constitution bill, it must mention it when three months later it brings the GST bill here. "We will campaign that it should not exceed 18 per cent," he said.
"The heart of this Bill is the rate of tax" and that should be kept low, he added.Stressing on the need for setting up a disputes redressal mechanism in the Council, he said, "You must oblige the GST Council to set up a dispute resolution authority, ex-ante.
I am glad that some strengthening has been done to this provision. But there is still time to strengthen it. Finance Minister can do so by introducing an amendment during this debate."
Chidambaram said the dispute resolution between the Centre and a state or between two states or between a group of states is not a matter on which the Constitution is silent.
"Article 131 makes this very clear. Dispute resolution is judicial power. Time and again judges have said, if you encroach upon our judicial power we will strike it down. The draft circulated was abominally deficient," he said.
He expressed satisfaction over government agreeing to scrap the provision of one per cent levy of additional tax by states. "How can you, in a destination-based tax, have a retrograde provision like some states being allowed to impose an additional one per cent tax?
The Chief Economic Advisor pointed out that this was a retrograde provision and I am happy it was scrapped," Chidambaram added. He also pointed out to the "clumsy" drafting of the bill but said nothing much can be done at this late stage when it is being debated upon.
He added that there is a provision on what will go or not go in the consolidated fund of India in the amendments. "This should have been thought of earlier. Revenue must go in consolidated fund. It can't go anywhere else. The draft Bill leaves unanswered," he said.