India imposes regressive nationwide sales tax
By
Kranti Kumara
18 August 2017
With great fanfare, Narendra Modi’s Hindu supremacist, big business BJP (Bharatiya Janata Party) government has imposed a nationwide Goods and Services Tax (GST).
Inaugurated July 1, the GST has been touted as an attempt to “modernize” India’s sales tax regime and create a single consumer market.
The rationale provided by the Modi government and its supporters in the press is that the GST will replace and/or harmonize the myriad of taxes that hitherto have been levied separately by the central and state governments depending upon the good or service. This, in turn, or so the argument goes, will ease the “cost of doing business,” attract new investments and, thereby, boost economic growth.
Under India’s federal constitution, the state governments were given the exclusive right to raise revenue through sales taxes on goods and services, with the central government permitted only to impose a Central Sales Tax (CST) on goods that had been transported across state lines. A constitutional amendment was therefore required to grant sales-tax powers to the central government before the GST could be approved by parliament.
In the case of intra (within) state commerce, the GST is comprised of two components, termed CGST (Central GST) and SGST (State GST). Commerce between India’s states is subjected to an Integrated GST, from which revenue payments are made to the central government and the exporting and importing states. All these taxes are ultimately off-loaded onto, and extracted from, the final consumer.
This “big-bang” tax-reform is part of a larger program of “pro-market” policies the right-wing Modi government has single-mindedly enacted since coming to power in May 2014….