Former Finance Minister T.M. Thomas Isaac said it was “high time that we revisited the Goods and Services Tax (GST)“ to allow more flexibility for States, including room for the States to modify their rates. He told The Hindu on Wednesday that the flexibility for the States would not affect either the Central GST or inter-State rates. He pointed out that Kerala has had a flood cess, which had run smoothly. He also said that the States, as of now under GST, did not have any flexibility on fixing rates.
He said that the tax system should be revenue-neutral with luxury items being taxed higher than other essential commodities. A tax system being revenue-neutral means that the changes in tax laws would not affect the volume of revenue earned by the government.
Another key point he raised was that the Central compensation period for the States should be extended to another five years to help the States because the volume of tax revenue grows fast as the economy grows.
