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Govt's hurry will only lead to inflation: P Chidambaram

Congress leader P Chidambaram on Saturday said that micro, small and medium-scale traders will suffer huge losses due to its implementation and inflation will seriously be impacted.

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Coming down heavily on the BJP-led NDA government for hurriedly pushing the Goods and Service Tax (GST), former finance minister and senior Congress leader P Chidambaram on Saturday said that micro, small and medium-scale traders will suffer huge losses due to its implementation and inflation will seriously be impacted.

The anti-profiteering provision in the new law would be an instrument of harassment in the hands of officials, he told reporters at his hometown Karaikudi in Sivaganga district.

"Micro, small and medium scale traders will suffer huge losses because they are not ready for the rollout of the new tax regime. They asked for more time, but denied," he said, adding the consequence of the new law would be known only after some time. He also noted that 80 per cent of all goods and services would bear a tax and prices would be higher. "There will be inflation. What is the government going to do about it?" he asked.

Recalling that the UPA government had done all the homework for the law and at that time the BJP had bitterly opposed it, Chidambaram said the same BJP, when in opposition, had protested against the GST tooth and nail.

"No one can deny this fact," he said.

Chidambaram, who had included the GST proposal in the Union Budget for the first time when he was Finance Minister, said ideally GST meant one tax and the Congress had accepted the concept of a standard rate of 15 per cent along with a standard plus or standard minus rate. "We had said at any rate the tax cannot be beyond 18 per cent. We also accept the fact that there cannot be one tax rate in view of the current economic situation." He said against the concept of one rate, there are multiple rates now — zero per cent, 2.5 per cent, 3 per cent, 5 per cent, 15 per cent, 18 per cent, 28 per cent and 40 per cent. "It is still far away from being a GST. It is still not GST," he said, adding that even the Chief Economic Adviser has favoured only a 15 per cent rate.

Congress leader noted that many products like petroleum, electricity and alcohol have been kept out of GST. "Petroleum and electricity constitute 35 to 40 per cent of the economy which is out of GST," he said, adding there will be two taxation systems — one old that includes customs, excise and sales tax covering these products, and the other new.

Terming the anti-profiteering provision as 'bizarre', he said it must have been conceived by someone who does not understand economics or business or market economy. All these flaws should have been removed and people are given time before rolling out the new tax measure. "Nothing would have been lost if the government deferred the rollout by two to three months," he said.

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