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Centre creating distrust with state govts over GST: BJP
May, 10th 2011

Even as the crucial Constitution Bill to roll out a Goods and Services Tax (GST) is before the Standing Committee on Finance in Parliament, the Bharatiya Janata Party (BJP) has accused the Union government of creating distrust with state governments, rather than working for a consensus and trying to solicit their cooperation.

The BJP leadership says the Centre must try and build relations with state governments, irrespective of the political party in power. There is a point when cooperative federalism is needed. Some states have fear of GST. The Centre has to remove those fears to bring them on board, irrespective of which party is in power in the state, said Arun Jaitley, leader of the Opposition in the Rajya Sabha, at the national executive meeting of the Federation of Indian Chambers of Commerce and Industry. Issues on which the government could build consensus had to be identified and presented by the government, he said.

Adding, in the GST context: Cooperative federalism cannot just be a PR exercise. This government is creating distrust, rather than cooperation.

Asked Jaitley: How can the Union government expect states to support GST when there are states like Uttar Pradesh that has been demanding an international airport, every project of Orissa is scuttled and members of over 90 countries were present in Gujarat but there was none from the government of India?

The Union government, he said, had made no effort to take the principal opposition party into confidence, although its state governments represent 35 per cent of the countrys population. For instance, the government had not taken the BJP into confidence on decisions regarding the Lok Pal Bill, after social activist Anna Hazare led demonstrations against corruption.

The BJP has not even seen the draft of the Bill. The initiative for a political consensus on the issue must come from the government. I am as much a spectator as you are, he said, while addressing the gathering.

After failing to evolve a consensus on the draft of a Constitution amendment Bill for GST, the Centre had presented the Bill directly in Parliament. Earlier, it tried to build a consensus and moved three drafts in the Empowered Committee of state finance ministers, but BJP-ruled states, Uttar Pradesh and Tamil Nadu continued to oppose these. The Centre needs a two-third majority in the Lok Sabha and the Rajya Sabha, separately, to pass the Bill. Besides, concurrence of at least half the states is required for the Bill to become an Act.

A Constitution amendment is required because the Centre cannot impose a tax beyond manufacturing and states cannot levy a service tax under the present scheme of things. Under GST, both the Centre and states would impose tax on the common pool of goods and services. GST would replace excise and service tax at the Centre, and value added tax in the states, besides cesses, surcharges and local taxes.

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