Issue of dual control in GST should not be an ego battle: Manish Sisodia

Richa Mishra Twesh Mishra New Delhi | Updated on January 16, 2018 Published on December 09, 2016

MANISH SISODIA, Deputy Chief Minister of Delhi

It is difficult to perform when the Centre is at loggerheads with the State, says Delhi Deputy CM

The shadows of demonetisation could loom large over the next meeting of the GST Council. “We will want this issue to be addressed at the next meeting,” said Manish Sisodia, Deputy Chief Minister of Delhi. Sisodia, who also holds the portfolio of finance and revenue, is part of the GST Council that is headed by the Union Finance Minister Arun Jaitley. The State Finance Ministers have been voicing their concern on demonetisation and the after-effects, if the Goods and Services Tax regime is rolled out from April 1, 2017. In an interview with BusinessLine, Sisodia spoke about the challenges which the States face post demonetisation and simultaneous roll out of GST, and the Aam Aadmi Party’s perception of the private sector as well as its future political plans. Excerpts:

The Union Finance Minister said that though demonetisation was outside the purview of the GST Council, on request from the States, discussions did take place subsequently. Were the concerns addressed or will demonetisation figure in the next Council meeting as well?

Demonetisation will have its impact on State finances. To become part of GST, the States are forgoing their revenues, which is to be compensated by the Centre. The Centre is not providing compensation from its kitty. States are forgoing revenue on demerit goods to fuel this package. How will the Centre get the money to pay this compensation? Eventually States may be asked to opt for a even lower tax slab to 26 per cent from 28 per cent for the compensation package. We seek answers from the Finance Minister. The agenda of the meeting might be limited to draft of GST law, but GST is affected by demonetisation. We will want this issue to be addressed at the next GST council meeting.

Besides demonetisation, the other issue which is hampering consensus is administrative control of small business, particularly services. Do you think the government can go ahead with GST, even if there is delay in reaching consensus?

The Central government has approached dual control from the perspective of them having 30,000 tax officers. Their argument is that they will also have to be utilised. The cross empowerment issue cannot be addressed from the perspective of number of employees. The approach should be the exact opposite. Tax officers should be allocated as per the need of the tax structure. The number of employees today cannot decide the future of tax structures in the country. This is equivalent to me deciding the education policy of Delhi based on the number of teachers and not on the needs of education.

The Centre needs to realise that the States have surrendered their right to tax the traders on VAT and many other fronts. The rights have been vested with the GST Council with the objective of togetherness. This should be an ego battle of 30,000 employees versus some 2.5 lakh employees of all States put together.

The argument of the Centre that the State officers do not have expertise in dealing with high tax quantum is invalid. No body in the country has an expertise in GST, it will be developed. If the Centre is that capable, they should collect municipal tax too. The more you move towards localisation, the more should be the right of State governments to tax.

Resolving the dual control logjam is the need of the hour. Under Section 7 of the law, the power of officers needs to be defined, under IGST as well. How can they pass the Act without defining these? It’s not a party versus party issue.

How difficult is it to implement reforms at the State level while being at loggerheads with the Centre?

It is tough. It seems that Prime Minister Narendra Modi has taken the defeat in Delhi Assembly elections personally. The Centre has been vindictive towards the reforms by using the Lieutenant General. Even initiatives that have been earlier lauded by their Ministers are being obstructed. This approach is unfair for politics.

There is a perception that AAP is against the private sector...

We are not against the private sector. The domain of the private sector is to indulge in business. It is not the role of the government to do business. The government is a facilitator. But, accountability is needed when private companies associate with the government and offer a public service such as power distribution. They cannot be free to loot. You cannot just grease pockets of ministers and bureaucrats and then be free to do as you wish. There are laws that need to be adhered to while offering services.

By that assessment you are open to any CAG audits of government associated entities?

Of course. We did not say that private companies should be wound up. We said that power distribution companies have projected inaccurate losses to jack up power tariffs. We have not let power tariffs increase in Delhi. If the utilities were making losses they would have immediately exited — take the example of the Metro project. The moment they accrued losses they exited.

They are making huge profits, but are projecting fictitious losses to coerce a power tariff hike. This tendency of multiplying profits by greasing pockets of politicians and bureaucrats should not be allowed.

Are we looking at the 2019 elections? When AAP came to power it said it doesn’t believe in caste politics. But, now for Punjab, AAP has started batting for a Dalit Deputy CM?

There are two ways, one is doing politics for caste, and the other is to bring everyone on to the same platform. If Dalit youth are attacked in the country for opting out of leather trade, then they need some hand holding. One has to be inclusive. We believe in taking everyone together into the decision-making process. There has never been a Dalit deputy CM there, despite there sizeable numbers in Punjab.

Looking at 2019, no, frankly speaking our targets are Punjab, Goa and of course after that Gujarat.

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Published on December 09, 2016
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