Oppose GST and Demand Abolition of Indirect Taxes

To increase the tax burden on the people, to favor the corporate big capital over the small entrepreneurs and to undermine whatever fiscal rights are granted to the states in the Indian Constitution, RSS-BJP Govt. has launched Good & Services Tax (GST) from July 1, 2017. Touted as the reform of indirect taxation in the country, GST has three types and several slabs. Besides several items like petroleum products and alcohol have been kept out of the purview of GST so that high taxes on them do not figure in the GST tax rates.

GST would greatly increase the burden of indirect taxes which are paid by the common people. Already Indian Govt. receives two third of its tax revenue through indirect taxes while indirect taxes constitute only a third of tax revenues of the governments of developed capitalist countries. Tax GDP ratio in India compares favorably with these countries largely due to expenditure on social sectors in those countries while this is almost nominal in India. Expenditure on education, health and other social sectors is almost a pittance in comparison. Despite already heavy burden of indirect taxes on the people, GST would mean further addition to this burden. Experience of countries that have implemented GST points to sharp rise in prices of goods and services in those countries. Tax rates have been hiked on services and most of the goods. Even the items which have been exempted from taxes or have been kept in lower tax slabs will suffer due to the increase in prices due to higher taxes on different services and items which are involved in their production, transport and sale.

GST represents a very sharp attack on small businesses. These have been brought under the tax net by decreasing the limit of exemption. Not only they will have to submit their papers three times a month, many of the items produced mostly by small and medium enterprises have been brought under the higher tax slabs. It is pertinent to note that it is these enterprises which employ most of the industrial workers in the country. GST is being touted as “avoiding tax on tax” something that was propagated about VAT which has now been assimilated into the new GST regime. This avoidance entails large amount of account keeping, sale and purchase through select channels and this makes products of the large production chains taking their inputs from other sources relatively cheaper. Large numbers of small enterprises get their inputs from informal sector and hence would end up paying higher taxes on their products. A number of industries which employ a large number of workers are facing closure due to high tax burden being proposed under the GST. Obviously along with small entrepreneurs, workers too would suffer being rendered unemployed and unable to find alternate employment. Workers of these enterprises would face more hardships as the owners would transfer the entire new burden of GST onto the shoulders of workers through further depressing their wages and depriving them of other benefits.

GST also represents a very serious and crude blow on the federal structure, even to the extent it is embodied in the Indian Constitution. Foreign companies have long been demanding that Indian Govt. abolish different tax rates and all enterprises should be brought under the same tax regime for providing “level playing field”. Indian Govt. has taken this step also to attract further FDI which the Govt. is projecting panacea for all the ills plaguing the economy and hampering economic growth.

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