April 5, 2017
Trinamool’s Derek O’Brien speaks on the GST Bill
Sir, 17 years is a long, long time in the life of all of us in the Rajya Sabha. We may have made a friend 17 years ago, but the friend may not be here today. Seventeen years is also a long time in the life of Parliament. Sir, it’s been a fascinating journey for 17 years. Seventeen, because the concept of setting up an Empowered Committee to examine GST – even before the Congress party in their Budget speech, which was announced by Mr Chidambaram – was actually floated by Mr Vajpayee in 2000; but no one really bothered about the abbreviation ‘GST’ in 2000, till it was taken up by the UPA much later.
In 2000, people were all obsessed with another abbreviation, which was not GST – KBC or Kaun Banega Crorepati; an international format was taken, a very successful international format, and was brought to India and given an Indian feel by the great Amitabh Bachchan and Siddhartha Basu, and they created a winning show.
The point here is that over the 17 years this (GST) has evolved and today we have something of which I think we would all be very proud of. I’ve had the privilege of representing my party on the Select Committee and also speaking the last time here on GST. So I will get to the economics of it; but since everybody before me has felt a bit shy of talking about the politics of it, let me indulge in it a bit. I am sitting not exactly in the middle, but we are sitting in this arc. This arc is a nice place to see what is happening on this side and what is happening on the other side.
GST – when I was looking back over the last 17 years – is actually ‘Go Slow’ and there is a ‘T’. ‘Go’ means when you are in the Government you go for it, but when you are in the Opposition you ‘slow’ it down. We’ve been seeing this with two of our parties; and there this arc in the middle who have been baying the thrust – be it the SP, be it the BSP, be it the JD(U), be it the NCP, be it the Trinamool, be it the Left Front or be it the DMK. All of us have tried to be the thrust. I think today is not the day for taking credit; we all did it together.
I’ll talk a little later about the economics of it. Let’s begin with the politics of GST. I have two quotes here from the meeting of the Parliamentary Standing Committee on Finance in 2012.
This is from Gujarat: “While the loss of revenue is expected due to removal of cascading effect, unacceptable revenue losses would arise mainly on account of the inability to achieve Revenue neutral rates, the loss of CST revenues and the sub-optimal collections from services sector.”
Let’s go to another State. I think this is a good day to record all these. So when everyone wants to take credit then we all know who was where and when.
Madhya Pradesh: Fiscal health of States is likely to deteriorate because of the substantial tax revenue loss, they will not be able to mobilize additional resources for development as they cannot change the rates structure of the most important tax instrument available to them.
I will go on the other example and I must give the credit to BJP what they put up in their 2009 Manifesto, they have not removed it from their website that is good.
The BJP 2009 Manifesto said, “CST will be abolished and GST will be rationalised between 12 and 14 per cent.”
Then why did you oppose the Bill when it was introduced in 2011?
And I am not here to score points actually am just here to raise some level of consciousness that when you are taking credit please understand where you are and where you have come across the board.
Now, how can we leave out Twitter?
On 27 February 2014, the then Chief Minister of a State in Western India (Gujarat) had tweeted: “On GST, without proper IT infrastructure GST will be difficult to implement.”
Then one more –
“Centre’s preparation on GST is inadequate. They haven’t addressed state’s concerns.”
Sir, I have two-three more quotes because this established my point strongly.
Quote of the Finance Minister of Madhya Pradesh:
“Prima facie the proposed changes are not acceptable to us as they end states’ autonomy and are against the spirit of parliamentary democracy”
And of course the person I had a pleasure of meeting when I was in Select Committee because he came and deposed (In Mumbai when we are deposing) was the Gujarat Finance Minister Saurabh Patel. This is a nice crisp quote. It says, “It is completely against fiscal federalism.”
So we accept this kind of illness or this kind of condition as we move along whether it is on GST, or FDI, or MNREGA, where people sit depends on what stand they want to take. So much for who is sitting where.
Trinamool consistent on GST
My party Trinamool Congress led by Mamata Di, we are sitting in this arc. In our 2006 2009, 2011, 2014 and 2016 manifestos – we promised three things on GST.
- We promised that we will support the ‘Idea’.
- We promised that we will support the ‘Implementation’.
- And as we have done in the last 3-4 years as a responsible opposition party after the idea and implementation, we promised the third ‘i’ – we provided some ‘Insights’ which have helped us move along.
So, there was a lot of consensus and this government ought to be given credit where due – they’ve pushed for consensus and got consensus. I’ll tell you about one example, which is the exemption of the category of petroleum, tobacco products and inter-State transactions. I appreciate what the Congress speaker was saying in the beginning, that he was looking for perfection. Now who defines perfection? Does the Congress party define perfection or does the BJP define perfection? I think this is a very good example where perfection was not achieved, it will never be achieved but the parties in the middle helped us get to somewhere nearest to perfection.
Sir, on the consensus: there were differences and we sorted those differences out – be it on petroleum – there were three members from the Congress party, there were about eight or nine of us from the arc and there was the BJP, so this got addressed as this was the broader opinion.
Sir, two very important points from the Select Committee: we had about 22 meetings – we spent eight meetings on one subject but we arrived at a solution, and these I think were the turning points of reaching a consensus, Sir. One, the States: it was written in the Bill that Centre ‘may’ compensate the States. We had to hear all the legal talk, from lawyers from both sides, saying there’s no difference between ‘may’ and ‘shall’, that it means the same thing. But for all the talk in the Select Committee, we thought there’s a big difference – you know, you may die versus you shall die. So that was a good consensus. We moved from ‘may’ to ‘shall’.
And the second one, which took us four months: earlier it said ‘up to five years’ – so the Centre could compensate the States ‘up to 5 years’, which was changed to, after a lot of pushing and shoving, to ‘shall’ compensate ‘for’ 5 years. So these were the two major points of consensus.
There were two significant meetings of the GST Council which were held in Kolkata. The chairman of the GST council was the Finance Minister and the West Bengal Finance Minister was the chairman of the Empowered Committee. If you look at those minutes, and history should record these minutes, for the first time all States reached a consensus on GST in the Empowered Committee meeting held on June 16, 2016. That’s when the Finance Minister made that statement, that we actually got to a consensus. That was a historic meeting, Sir.
I want to dwell a little on the Empowered Committee because this is also about giving credit where it is due. The Empowered Committee was responsible – and this is not about one party, this is across all the Finance Ministers on the Empowered Committee. It was responsible for
- i) Keeping small businesses under Rs. 20 lakh turnover outside of GST ambit.
- ii) Give coastal States the right to tax economic activities within 12 nautical miles.
iii) States would have the powers to administer 90% of assessees with an annual turnover of up to Rs 1.5 crore. There are 22.71 lakh taxpayers in this category in the country. The number of such taxpayers in West Bengal is around 90,000.
Then there was the issue of MSME, which was a sticking point. A business entity with turnover upto Rs. 50 lakhs can avail the benefit of a composition scheme under which it has to pay a much lower rate of tax and has to fulfil very minimal compliance requirements. The Composition Scheme is available for all traders, select manufacturing sectors and for restaurants in the services sector.
So there was a lot of work which happened there, and I would be failing in my duty, speaking here in Parliament, and not acknowledging beyond the politics, the tremendous effort made by the Empowered Committee. I am so proud that my colleague Dr Amit Mitra was the Chairman of that Committee.
Sir, I was talking about one party’s views then and one party’s views now. I want to come to the broader picture now. By bringing a Money Bill, you are bypassing the Rajya Sabha; this is a serious issue. It is a ‘then and now’ syndrome – and am glad the Leader of the House is here as I say this.
The Leader of the House said this, in his earlier avatar: “Parliament’s job is to conduct discussions. But many a time, Parliament is used to ignore issues and in such situations, obstruction of Parliament is in the favour of democracy. Therefore parliamentary obstruction is not undemocratic.”
But that was then. Now he says, “We are ready for discussion… Why are you (Opposition) running away from a discussion?”
I was reading Mr Jaitley’s blog about two years ago and he has spoken publicly about the whole concept of the Rajya Sabha. He talked about the Rajya Sabha being equivalent to the House Of Lords. It was almost like saying in Rajya Sabha we can have a pause button but we can’t have a stop button. Why? Because the House Of Lords has a pause button. But the composition of the House Of Lords is very different. Twelve members here are nominated because they have excelled in certain fields; the rest of us here have been elected by MLAs in our States. The House of Lords is a House of privilege. So using that as an example, or for that matter using the example of some of the other European countries, to demean us at the Rajya Sabha, becomes a problem.
Along with the serious stuff, a few touches of quizzing and football. Sir, the great footballers of the world – Messi, Pele, Maradona, all had Number 10 jersey; if our Leader of the House had to wear a football jersey, it wouldn’t be 10. It would be 110 because everything is Article 110 for him. I say this in a light hearted way.
Sir, the GST is the best example of our Rajya Sabha playing a constructive role. If nobody else should convince the Leader of the House, at least the Chairman of the Select Committee, the very articulate, the very composed and very balanced Bhupendra Yadav should convince his other party member regarding the role of the Select Committee – how hard we worked. For me this is my first term as a Parliamentarian and the last five years have been the most wonderful experience for me. Being on the Select Committee – and as I come to the end of my term in another few weeks – I have learned so much.
The GST council is very nice, it has been represented in a federal way; we appreciate that. We are all behind this Bill, we all want GST to be rolled out on July 1. We only have one issue to which I will come back later.
I want to stick with my points on the Rajya Sabha because we have done a lot of talking on the politics of the GST. Sir, one little statistics about the Parliament. Sir,, in the Winter Session of 2010, Parliament was disrupted for 22 days due to 2G Scam, on the demand for a JPC. This was the longest logjam since Independence. With BJP in opposition between 2004-09 Lok Sabha lost 423 hours, and between 2009-14 Lok Saha lost 892 hours; this is a record in legislative history. So, when the BJP starts giving us lectures on being a responsible opposition, it is a bit hard to digest.
Sir, I told you about the Select Committee, I want to give you some insight, as everyone is fighting about who gave birth to the idea regarding the GST. I want to say that GST is nobody’s baby, it was born somewhere in the middle. So, give us some credit.
Sir, we have more practical suggestions or insights. Suppose a dealer sells an air-conditioner and also provides installation and other post-sales services. Under the proposed GST structure, a rate of 28% will apply to the former and 18% to the latter. This immediately creates an incentive for the dealer to allocate the costs of the air-conditioner towards the services that he is providing.
The second scenario, Sir, is about a television set. In fact, this example was given by Arvind Subramaniam. GST will be applicable on the price of the item, without taking into account the reduction in price on account of the exchange. If someone wishes to buy a new television set with a price tag of Rs 40,000 and he is availing of an exchange offer where his old TV is valued at Rs 10,000, he would have paid Rs 30,000 to the retailer under the current rules, and VAT would be applicable on that amount. But under GST, tax would be levied on the actual cost of Rs 40,000.
Sir. when we, Trinamool Congress, oppose something, we oppose it strongly, but, when we back something like GST, we back it strongl. And when we criticise something, we criticise strongly. But, when we make suggestions we make it with a positive spirit.
Sir, the Arrest clause; it is draconian. Barring Gujarat, no state has the arrest clause in VAT and it has never arrested anybody. Above Rs 2 crore tax violation will be eligible for arrest but bailable. The minute you cross Rs 5 crore, it is non-bailable. In West Bengal, tax collection doubled in five years without the power to arrest.
There are almost 4,000 items whose rates are yet to be fixed. Basic rates have been fixed, zero, one, five, twelve, eighteen and twenty eight. But what about the rate of the individual commodities? There will be a problem of fitment. If one tax rate is 15%, how will it be fitted in 12% or 18%?
Sir, reading these days has become a little boring because all I am doing is reading old speeches of the great Parliamentarians who are sitting in the house. This one I read was that of Mr Jaitley: “If you want to build consensus, you need a big heart. You need a non-discriminatory approach; you need to be fair; you need to consider the Opposition as an essential part of India’s democracy and not a political enemy.”
In that spirit, I hope the government will consider the one amendment by the Opposition; I believe the Congress party – Mr Jairam Ramesh – has moved the amendment, and there may be some others. Please do not let us get into a political slugfest over this. What is the point of this amendment Sir? The GST Council is a strong federal body, no doubt about it. But, when the GST Council makes a recommendation, our humble submission is, it has to come to Parliament. You cannot then expect to bypass the Parliament, and then hope everything will be alright.
The counter argument to this could be that then you are taking away the federal structure because GST Council itself has a federal structure. So, this a point and we are very open with this; whether the Finance Minister will take it in the spirit of having a big heart, I do not know.
Sir, this basically, is the summary – a little bit of modern history, a little bit of the reality of politics, some constructive suggestions. For Trinamool Congress, for us, GST is very important. We have been promising it, promising it and promising it and now no matter what the differences are, it seems that we are all set to roll it out on July 1, 2017.
I started with the famous quiz show, Kaun Banega Crorepati. at least now we have answered the question, which the nation has been asking – which is: KBC, Kab Banega Consensus?
Thank you Sir.