GST MUST be passed NOW, if we need reforms

The Economic Survey 16 said the proposed Goods and Services Tax (GST) bill was important for reform measures and an unprecedented in the modern global tax history.

The GST, to be implemented by the Centre, 28 States and 7 Union Territories, awaits a Constitutional amendment requiring broad political consensus.

The GST is estimated to affect between 2 to 2.5 million Excise and Service Tax payers.

Pointing out that just 5.5 percent of earning individuals are in the tax net, translating to a ratio of about 4 percent of tax payers to voters, the Economic Survey said the ratio should be raised to a desirable estimate of about 23 percent.

It says that the taxpaying and political participation are the two important accountability mechanisms wielded by citizens.

The survey suggested that the easiest way to widen the tax base would be not to raise exemption thresholds.

Bringing more and more people into the tax net via some form of direct taxation will help in realizing the promise of Indian democracy.

The Economic Survey called for reasonable taxation of the better-off individuals regardless of where their income comes from, - Industry, Services, Real Estate or Agriculture.

The Survey identified Property Taxation as an area calling for urgent attention. Higher Property Tax Rates with periodic updation will improve local government finances, discourage speculation in real estate sector and pave the way for Smart Cities.

Another alternative to fiscal consolidation would be to reduce subsidies to the well-off amounting to about Rs. 1 lakh crore by better targeting subsides to the poor.