The cost of GST & fiscal crises in states

MORE than seven years since its introduction, the Goods and Services Tax (GST) regime, hailed as a game-changing innovation at the time of its launch, is still being sustained with hype. From the point of view of performance, the regime, while not yielding the revenue gains its “efficiency” was supposed to deliver, is proving to be the final factor driving most state governments to bankruptcy.

The Central Government has sought to conceal this reality by reporting the nominal values of GST collections every month and comparing them with the previous month or the corresponding month of the previous year.

It is to be expected that so long as the GDP growth is positive, revenues from taxation, especially indirect taxation, are likely to increase in nominal terms. But even this “natural” trend has been broken by multiple monthly figures that point to a lower yield of revenues than in past periods chosen for comparison.

To make up for that bad news, the Centre has tended to make much of those months when nominal or current price figures are higher than in the past, advertising “record” collections in hyped press releases.

Source : https://www.tribuneindia.com/news/comment/the-cost-of-gst-fiscal-crises-in-states/