Drabu says new tax regime will lead to ‘cooperative federalism’

On the day Kashmir’s business community opposed implementation of Goods and Service Tax (GST) region in J&K, Union Finance Minister Arun Jaitley said any move to oppose the new tax system was “anti-people”.

“Those opposing the GST due to lack of knowledge will mean that consumers will have to pay double tax on inputs as well as the final product,” he told a press conference here.

The Union Minister said reiterated that Jammu and Kashmir Assembly has full authority to take a call on implementation of the GST. “(But) non-implementation of the GST is anti-people,” he said.

To question about the timeline for the GST implementation, Jaitley said: “We are in state of readiness”, and confirmed that July 1 would be the roll-out date for GST. He also allayed concerns surrounding the new tax regime, saying rates have not been hiked and insisted under the new system, either present rates were maintained or brought down.

The State Finance Minister Haseeb Drabu termed the GST Council as “India’s first federal institution,” saying the new tax regime “would pave way for cooperative federalism.”

“The GST will bring major changes in fiscal and political side of India’s federal structure because of which coercive federalism will pave way for cooperative and competitive federalism,” Drabu said, speaking at a roundtable of Finance Ministers here during the day.

Touted as the biggest reform in indirect tax structure, the GST would introduce a single tax on supply of goods and services, right from the manufacturer to the consumer. Once GST comes into force, all central-and state-level taxes and levies on all goods and services would be absorbed within an integrated tax having two components: a central GST and a state GST.

Drabu said the new tax regime has sown the seeds of lateral federalism by recognizing the new political, economic and social realities in India. He said the GST should be looked at more in terms of changing federal polity across the country.

“The economic reforms ushered in 1991 didn’t seek to consult the states. Now in 2017, with the GST being rolled out on July 1, every single state has been taken on board. This is one step which compliments other moves and changes the structure of Indian federalism,” he said.

He said the GST will institutionalise tax collection and increase compliance tremendously, thereby making India a better and vibrant country. “While there may be issues of sovereignty and autonomy, the GST Council is India’s first federal institution and we would like to see more moving ahead,” he said.

The roundtable was also attended by the Finance Ministers of Assam, Himanta Biswa Sarma, Kerala, Thomas Isaac and Karnataka. Welcoming them to Kashmir, Drabu said it is important to send out a signal to the rest of the country about the state of affairs in Jammu and Kashmir.

“There is a multi-layered reality to life in Jammu and Kashmir. While we have been dealing with the prevailing situation on one hand, it doesn’t stop life here. We are witnessing economic history in making in this beautiful city of Srinagar in an incredible manner through pooling of sovereignties. Nothing can make us prouder,” he said.