A high tax compliance and over-taxation is a theft. A complicated tax regime then becomes a perfect smokescreen to facilitate this theft. When the Congress came up with the idea of the Goods and Services Tax (GST), it wanted to bring India under a single-band tax system instead of the accounting nightmare that the GST has become under the BJP government, where different states levy different taxes for the same goods and services. We wanted to cap this tax at 18% in the interest of affordability and to keep up domestic demand for Indian commodities.

In a recent statement by the World Bank, the goods and services tax (GST) implemented by the Narendra Modi government has been termed as one of the most complex tax regimes with the second highest tax rate in the world among a sample of 115 countries which have a similar indirect tax system. As many as 49 countries around the world have a single-slab of GST, while 28 countries use two slabs; this was the idea as envisioned by the Congress party during the inception of the GST. However, as things stand, India is amongst the only five countries which uses a four or more non-zero tax slab system.

While in Opposition, the BJP did its best to stop the UPA from implementing the GST. Now, the Modi Sarkar has completely distorted the Congress' vision of the GST and has ensured that instead of the envisaged ‘Single Rate of Tax’ we effectively have five tax slabs of 0, 5%, 12%, 18%, and 28% with numerous private exemptions, zero rated exports, gold taxed at 3% rate, precious stones at 0.25%, while alcohol, petroleum products, and electricity duties are conveniently excluded from the ambit of the GST and continue to be taxed by the state governments at state-specific rates.

Finance Minister Arun Jaitley had promised last November that he will reduce the number of GST slabs by merging 12% and 18% slabs with others, once tax compliance improves and revenue buoyancy increases. Only a month away from the end of the financial year, the government’s promises seem forgotten.

Devoid of tax revenues post GST, with State government’s running parallel local taxes, tax compliance for a small trader has never been higher. And, as far as the tax receipts are concerned, tax revenue last quarter touched record lows. What used to be an annual 15-25% increase in tax revenues before GST, has fallen to a mere 1-2% in the GST year.

All this, thankfully for the Modi Sarkar, comes with the context and at a time when global oil prices are stagnant and in fact were falling in the first 3 years of his tenure. This is in stark contrast to the UPA regime, where not only were the prices high but, were rising at an increasing rate. Factoring it in, when tax revenues increase with no corresponding increase in government services, ease of compliance and welfare provision, the government turns dispossessor and needs to be voted out of power.