Even as Congress leaders reverted to their hard stand on the long-pending reform over the weekend, Union Finance Minister Arun Jaitley is all set to take up, on Tuesday, with State Finance Ministers the proposed amendments to the Constitution (122nd Amendment) Bill, meant for rolling out the Goods and Service Tax (GST) passed by the Lok Sabha.
The proposed amendments seek to address the main issues raised by the Congress for supporting the Bill in the Rajya Sabha, where the ruling BJP does not have a majority.
These include a provision for the setting up of a dispute resolution mechanism, which not only the Congress but also States such as Tamil Nadu had demanded.
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At the meeting of the empowered group of State Finance Ministers, Chief Economic Adviser (CEA) Arvind Subramanian is likely to make a presentation on the revenue-neutral rates of the GST (the rate at which there will be no profit or loss to the State).
Worry over variations
At the last meeting in Kolkata, which Mr. Jaitley had addressed, States had flagged the issue of the wide variation in the two sets of proposals on these rates — from a committee headed by the CEA and the National Institute for Public Finance and Policy (NIPFP).
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While the panel headed by the CEA has recommended a revenue-neutral rate of 15-15.5 per cent, the NIPFP has proposed a rate of 27 per cent, leading the Congress to demand that the rate be capped at 18 per cent, and that too in the Constitution itself to ensure that the interests of the poor are safeguarded.
Govt. offers solution
The government offered a solution to these concerns in back-channel negotiations with the party’s leaders last week to bring the main opposition party on board.
Mr. Jaitley will discuss these options with the State finance ministers at the meeting of the empowered committee, said an official source.
Additional levy dropped?
The Finance Minister is also likely to propose the withdrawal of the provision on an additional 1-per cent tax that was introduced to enable manufacturing States to raise extra revenue to compensate for possible losses from the shift to the GST, a levy on consumption rather than production. The Congress has demanded that the proposal for this additional levy be dropped.
In the countdown to the passage of the constitutional amendment Bill, which will need support of two-third of the voting members in the Rajya Sabha, the focus is now on Tuesday's meeting, with Chief Ministers of some States already indicating they plan to raise demands for compensation of revenue losses from the transition to the GST.
Following these deliberations, it is likely that the Centre will move the Bill for discussion in the Rajya Sabha during the week itself.
On Friday, while listing out government business for the week beginning 25 July, Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi told the Upper House that the Bill will come up for discussion next week.
“(For) further consideration and passing of the Constitution (122nd Amendment) Bill, 2014, as passed by the Lok Sabha and as reported by the select committee of the Rajya Sabha,” he said.