GST will foster a commercial union
which the Member States confer competences to attain objectives they have in common”. The concept of pooled sovereignty seeks to ‘confer competencies’ to achieve the common objective of fostering the multiplier gains from the one common entity that India will now become. In the process, some loss of autonomy is inevitable. This is the fundamental principle which forms the basis of multiple international agreements on environment, trade and tariff preferences. Organisations like the UN, WTO, World Bank, and IMF came into existence because nations agreed to collectively advance their common interests.
This is the first time that we have invoked the principle of pooled sovereignty. India has always been a common political entity, and as it moves towards a commercial union, the idea of pooled sovereignty should be embraced and broadened to other outstanding federal issues like sharing of natural resources. Meanwhile, leveraging ICT to improve tax administration efficiency and enhancing research capabilities of the GST council secretariat must be prioritised. It cannot be anybody’s intention to saddle the GST with other collateral ideological or economic objectives. Nonetheless, the implied impetus to economic growth has consequential spill over benefits.
The GST is a reality. This does not mean that the last words may have been spoken on further fine tuning of multiple issues . Multiple tax slabs and exemption of fiscally critical goods like alcohol and petroleum are by no means economically optimal. Nevertheless, constrained optimisation should be the mantra for the GST council. Allaying fiscal pressures require revenue neutrality be the supreme objective while setting indirect tax rates for goods and services. GST-induced growth, a favourable economic scenario and fruition of domestic reforms would definitely create sufficient headroom for recalibration of rates in the near future. Notwithstanding transitional hiccups, the time for GST is now, as John F Kennedy once said, “The time to repair the roof is when the sun is shining”.