It can be conceded straightaway that there is something aesthetic about taxation intricacies which could thrill the number-crunchers among the economists, administrators and some intellectually-inclined politicians. But the sleight-of-hand with regard to the proposed Goods and Services Tax (GST) displayed by India’s unthinking lovers of economic reforms is to sell it as the simplification of the messy tax system as it exists till now, with Central and the state governments levying a slew of mind-boggling taxes that leave many manufacturers and traders as well as the end-buyers/users in a tizzy. The argument is indeed very persuasive. It is not only that there are too many taxes but there are too many points where the taxes have to be paid. Apart from adding to the tax burden of everyone -- the manufacturer, the trader and the consumer -- along the way, it slows down the movement of goods across the country.

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In the attempt to simplify the tax structures, which is a laudable measure in its own right, the Vijay Kelkar Committee had come up with the elegant idea of GST that would be applicable across the country, doing away in the process the many different taxes, streamlining them. So, it is decided to evolve a tax structure that will hold good across the country. This is the kind of solution that only bureaucrats can come up with, and it does not take much effort to bamboozle the politicians who are keen to be doing something popular. It can be said that former finance ministers P Chidambaram and (now President) Pranab Mukherjee from the Congress side, or Yashwant Sinha and the incumbent Arun Jaitley from the BJP side are not simple-minded politicians, and intelligent bureaucrats cannot lead them up the garden path. But there is no denying the fact that Messrs Chidambaram, Mukherjee, Sinha and Jaitley were and are looking for solutions to break out of the entrapments of tax administration.

There was the general argument as well that one of the reasons that the free market economy is not flourishing is due to the fact that the taxation is high and there are too many of them. It is only partially true that punitive taxation has been the bane of the Indian economy, but that was not the only problem. An undeveloped economy and a primitive state were literally clawing each other helplessly. The idea of GST was not only sold as a panacea for breaking free from the nightmares of tax administration, but it has also been presented as the elixir of a free market economy. It is an oversimplification that both politicians and bureaucrats love, and which enables them to look away from the real challenges of administering the GST.

The Congress and the BJP did not spell out the fact that the Constitution Amendment Bill would not usher in the GST. It was only on Wednesday that the cat was let out of the bag as it were that for GST to become a reality three different bills have to be passed, two by Parliament, and one by the different state legislatures. The Central GST Bill, the Inter-State GST Bill have to be passed by Parliament, and the state GST by the state legislatures.

Ideally, the Constitution Amendment Bill should have been accompanied by the Central GST and the Inter-State GST Bills. But there was an inbuilt inhibitor or speed-breaker in the whole thing. The GST architecture envisages a GST Council comprising the state finance ministers which will be headed by the Union finance minister, and two the ministers of state looking after revenue and taxation will be its members. It is only the GST Council that can formulate the GST Bills. And the GST Council comes into existence only after the passage of the Constitution Amendment Bill. But this amendment bill has to be ratified by at least half of the states in the Indian Union for it to come into effect. But this is only the beginning of the bureaucratic complications that have been built into the so-called elegant GST system. It has not been spelled out whether the state GST Bill too has to be formulated by the GST Council before the respective state legislatures can pass them.

It will be said that in bringing the whole country into a single tax structure would involve lot many bureaucratic operations, and that its implementation would be underpinned by a gargantuan tax network, supported of course by Information Technology (IT)-enabled systems. And in the course of time perhaps the work of running the IT-based tax network can be handed over to the private sector BPOs, creating plenty of jobs in the service sector. Remember that many of the Indian and multi-national BPOs manage the tax systems as well as insurance, including medical, claims and liabilities in the United States and Canada.

It is not surprising that the successive finance ministers, the cheerleaders of the economic reforms, did not find it necessary to explain how the GST would operate on the ground. This, of course, excludes the contentious issue of deciding on the GST rates, which has to be thrashed out in the GST Council. The other fact that has been passed over in silence is that the tax revenues would be higher in the new system only when there is plenty of production and plenty of consumption in the economy. But then that is not the concern of the taxman, the politicians and the bureaucrats and the sundry experts would cry out: Our job is to erect a clean structure and wait for everyone else to pay up their taxes. It is emerging, however, that this administrative structure that is needed to back up a successful GST is quite a complicated, if not messy, affair. Finance ministers, past and present, have not been as candid as they should have been. So, at the moment it is more hoopla than anything else about all the good that GST is expected to do to the country.

The author is consulting editor, dna