The Idea of One Nation, One Tax is Under Siege

Context: As the country has witnessed one of the most acrimonious Goods and Services Tax (GST) Council meeting ever, the idea of 'One Nation, One Tax' is at risk.

Concerns 

• Forsaken trust and goodwill:  It was the foundation of indirect tax reform. The economic reform, which first time economically unified the country is likely to fall.

• Jeopardizing the idea of "cooperative federalism": At a time when the nation, under external (unwarranted military aggression by China) and internal threats (from the COVID-19 pandemic), needs to stick together. 

Problems:

• Rule book approach of bureaucrats: The principles of federalism outweigh the need to be right by the rules in such a once-in-a-century situation.
• GST dues owed to states: computed based on the 14% annual growth that was guaranteed by the Union government

• Covid-19 pandemic-induced lockdowns: Resulted in massive tax revenue shortfall, both for the central and state governments. 

• Union Government didn't generate enough funds for an economic stimulus

• Video Negotiations precludes the personal touch: To defuse an inclement situation engaging in informal parleys will help. This tactic cannot be applied in a video conversation. 

Way Forward: Task before the GST Council  - 

• Fixing the flawed GST rate architecture: supporting myriads of rates.
• Deal with economic meltdown: It has to address the monumental challenge posed by the covid-19 pandemic-induced economic meltdown on GST collections.
• Amicable resolution with States: especially before the case reaches the judicial clutches.
• Strong Political Leadership: is required to resolve the challenges before the GST.