Unified tax divides nation as GST rolls out

Jagdish Rattanani and R K Pattnaik

As the nation rolls out the single biggest reform in the form of the Goods & Services Tax (GST), the picture looks none-too-pretty. On the one hand is a celebratory mood, a midnight session of Parliament and all the atmospherics that go alongside a “tryst with destiny” kind-of moment. On the other hand is an Opposition boycott, a plethora of fears and apprehensions from trade and industry and a series of pre-GST discount sales that add to the anxiety. Many don’t know what tomorrow will bring, disposing off goods today and in the process showcasing GST as the unknown devil that is feared more than the known devil of complex taxes that we have lived with for decades. What we thus have is a divided body on a subject that should actually have united the nation. After all, “one tax, one nation”, the central idea of the GST, should have enjoyed the widest possible base of support.

To get the basics right, there is no question that the GST is a desirable reform that opens the gates to a system that will widen the tax net and set the stage for truly integrated, connected and formalised business practices that can be tracked and taxed to the last stage of consumption. The idea of a ‘kacha’ (temporary or off-system) bill and a host of other illegal but common practices can come to an end. All this will mark a signal achievement. Yet, one cannot fault the huge concerns that are being raised, the most worrying among them coming from the millions of micro, small and medium enterprises that are spread out across the nation and form the backbone of the Indian economy. There are similarly several other worrying components, among them being a digital backbone that has not really been fully tested, a tax structure that will require far too many clarifications and explanations as the new regime takes off, the lack of preparedness or even the capacity (let alone willingness) of tiny businesses to go digital at short notice and the reputation of a slow moving government machinery that is quick to collect but very slow on refunds. This is not to speak of concerns at several other levels, including those from State governments, professionals, and even big businesses, which are worried particularly about the GST readiness of their suppliers.

Consider just one aspect – the digital backbone called the GST Network which is the nerve centre of the new system. Officials at the GSTN plainly admit that they would have been better placed if they had more time. Reports indicate that a phase of testing was completed under the old rules in December but there has been no time for testing after changes in those rules and the resultant changes in software coding were incorporated. The return forms will be ready earliest in mid-July. So all in all, this is clearly a rushed enterprise, unlike anything that has been achieved anywhere in the world on this scale. What is worse, the government IT infrastructure isn’t particularly noted to be robust. There have been issues with other departments, and experience tells us that service levels for the system to be back and running again often are not citizen-friendly.

Given the scenario, this is a rather painful birth of a new system. One of the arguments being offered is that the system will stabilise soon enough, that waiting any longer may not have bettered the preparedness and that the earlier we plunge in, the better will it be because teething troubles will be present, whether we go in today or later.

But all the immediate arguments and concerns apart, the divisiveness and uncertainty that highlights the GST rollout is indicative of a manner of governance that steamrolls ahead, and sometimes faster than many others would, with the confidence that the government’s super majority in Parliament enables it to push ahead. This is particularly unfortunate on a reform like the GST, which could not have happened without the support of all the States and all the parties. In fact, this is one reform that the government had not only the opportunity but also the compulsion to discuss across the board and bring every single State and party on the same page. Having done that hard work, however well or poorly, it is particularly unfortunate that the Narendra Modi government has failed to capitalise on it and build a sense of goodwill, bonding, togetherness and bonhomie at such an important step in the nation’s history.

So if GST is cited as an important achievement of the BJP government, its inability or unwillingness to take along all sides at the time of the all crucial implementation is a signal failure. It stamps the government as unresponsive and in a hurry to push a reform for which the people are not ready. This gives a good law a bad name. The launch is made worse by turning the moment into a festive occasion – LEDs to light up Parliament, dinner celebrations by the Finance Minister and Amitabh Bachchan as a superstar brand ambassador stand in contrast to the genuine worries and concerns of a large number of people. Communication is important but all communications cannot and should not be about packaging. The government is not an advertising agency and GST is not a product. This is about changing the way we transact, do business and indeed live our lives. And such a deep change requires a more sensitive approach if it is to be adopted by the entire nation. It was a Governor of New York who once famously said: “You campaign in poetry but you govern in prose”. It’s a message the government will do well to keep in mind and work with the messy tid-bits, the grievances and the concerns if it is to make the implementation of GST a grand success. And if this meant holding back the rollout for a little more time, then that ought to have been done.

THE government is not an advertising agency and GST is not a product. This is about changing the way we transact, do business and indeed live our lives. And such a deep change requires a more sensitive approach if it is to be adopted by the entire nation. And if this meant holding back the rollout for a little more time, then that ought to have been done.