Congress Party Says 18% Cap on GST Rate Non-Negotiable

Congress today blamed “internal differences” within BJP for the non-passage of GST Bill and is insisting on an 18 percent cap on the proposed indirect tax regime to ward off the inflationary effects the reform measure could have on the poor of the country.

Congress leader Jairam Ramesh said the party’s protest over the passage of a private member’s bill granting special status to Andhra Pradesh was not aimed at “scuttling” the GST Bill.

“It is not intended to scuttle the GST bill because the government is so confident about the GST bill. Why is it reluctant to bring the GST bill? They talk big about GST bill, but when it comes to the crunch, they are unwilling to take the final step,” he told reporters.

Ramesh said that the GST Bill has not come to the Rajya Sabha not because Congress is opposing it, but due to large sections within the BJP which are deeply uncertain about the legislation and its inflationary consequences.

“That is the real reason why the GST Bill has not come, apart from the fact that the Prime Minister himself was opposed to the GST bill when he was chief minister of Gujarat,” he said. “I say this with full sense of authority and responsibility and there is internal differences of opinion within the BJP,” he added.

Ramesh said he has come to know that if GST is brought before the Uttar Pradesh elections, then it will have problems on account of inflation. “They keep saying and have put the blame on the Congress instead,” he said.

Asked why Congress had not thought about inflationary effect of GST before, he said, “The reason why the Congress party has suggested and insisted stubbornly on 18 percent cap is because if the GST rate becomes anything over 22-23 percent, as currently it is, it is bound to be inflationary.”

“In order to contain inflation, in order to ensure that the burden of taxation does not fall on the poor, we have suggested the 18 percent cap. The GST Council, the group of state finance ministers, which is meeting on Tuesday, they were talking last year on a GST rate of 25 percent. That is why we insisted on an 18 percent cap,” he said.

The government has been engaging with the opposition parties, including the Congress, for passage of the GST bill which is hanging for a long time now. Congress has put forth three issues, including a constitutional cap of 18 percent on GST, as condition for the party’s support for the legislation.