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The
government today reiterated that it would not adopt GST.
Madhya Pradesh is the first state to refuse GST on
grounds of losses of Rs 2000 crore annually to the
state.
State Finance Minister Raghavji, while speaking to
Business Standard, cautioned not only against haste in
introducing GST, but alleged that states would have
reduced fiscal autonomy and multi-tax system.
“The new tax system will escalate prices of commoner
items and will reduce prices of luxury items. It is not
in the interest of the poor,” he said.
He added that the central government never wanted the
states to stay autonomous in terms of financial
independence.
“After GST, the state will have to lose a maximum of Rs
2,000 crore annually. The rate of tax will vary from 1
per cent to 12 per cent and will be more on petroleum
products. But we will lose Rs 700 crore at one go as we
will have to remove central sales tax,” the minister
said.
“In addition to service tax, there will be five slabs —
1 per cent, 5 per cent, 8 per cent, 12 per cent and
another slab for petroleum products. This will create an
ambiguity and traders will have to face authorities at
the central and state levels. They will also have to
file separate returns for state and central level
taxes,” he added.
The new tax system would replace excise duty and service
tax at the Centre and value-added tax (VAT) and local
taxes at the state level.
Besides Madhya Pradesh, Chhattisgarh, Haryana and Tamil
Nadu also have reservations on GST. “We are not strictly
opposing the GST but we want the Centre should not
impose it in haste,” Raghav ji said.
He said even foodgrain would attract tax and as a
result, not only traders but farmers will also be
affected with the new system.
Source
: The Business Standard, India, dated 23/09/2009
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