Back on Track
GST’s travails went through another interesting week of twists and turns. The acceptance of a new, modern tax system by its stakeholders is innate to its success. If people reject a system, and choose to operate outside it, as has been the habit, it would not meet its objectives.
The GST system came with structural fault lines. There were periodicity issues with complicated filings, higher tax structures that dis-incentivised consumption, and stricter compliance requirements. Too many filers needed to report every month, causing an overarching fear psychosis.
The current changes to its structure and working, are a step in the right direction. The government needs to move now. To ensure full compliance, we must remove the fears and create a conducive atmosphere to onboard assessees. While evaders will always keep trying to get off the hook, the system will need to wield a carrot and stick approach.
Government revenues are contingent upon meeting fiscal targets, public investment, job creation through newer projects, and macroeconomic stability. Taking a quick call to resolve the weaker areas of GST without hanging onto pride was the best thing it could have done.
Going forward, the government must maintain the same flexibility and show zero tolerance to tax evasion. By adopting a carrot and stick approach, the government will gradually raise tax compliance under GST. That would mee its stated objectives in initiating tax reforms.
“Price is what you pay. Value is what you get” – Warren Buffet