CPI-ML New Democracy, Ruling Class

Oppose GST, Support Struggles against GST and high taxes and Demand Abolition of Indirect Taxes

To increase the tax burden on the people, to favour the corporate big capital over the small enterprenuers and to undermine whatever fiscal rights are granted to the states in the Indian Constitution, RSS-BJP Govt. has launched Good & Services Tax (GST) from July 1, 2017. GST has long been demanded by imperialist capital and has been on the wish list of Indian corporate. It represents one of the most cruel attacks on the people and the rights of the states.

Touted as the reform of indirect taxation in the country, GST has three types and several slabs. Besides several items like petroleum products and alcohol have been kept out of the purview of GST so that high taxes on them do not figure in the GST tax rates. Moreover some of the indirect taxes will still continue to be levied by different authorities.

GST would greatly increase the burden of indirect taxes which are paid by the common people. Already Indian Govt. receives two third of its tax revenue through indirect taxes while indirect taxes constitute only a third of tax revenues of the Govts. of developed capitalist countries. Tax GDP ratio in India compares favourably with these countries largely due to expenditure on social sectors in those countries while this is almost nominal in India. Expenditure on education, health and other social sectors is almost a pittance in comparison.

Despite already heavy burden of indirect taxes on the people, GST would mean further addition to this burden. Experience of the countries that have implemented GST points to sharp rise in prices of goods and services in those countries. Tax rates have been hiked on services and most of the goods. Even the items which have been exempted from taxes or have been kept in lower tax slabs will suffer due to the increase in prices due to higher taxes on different services and items which are involved in their production, transport and sale. Lives of the people, particularly common people would suffer enormously due to rise in prices of goods and services, particularly of daily use.

GST represents a very sharp attack on small businesses. These have been brought under the tax net by decreasing the limit of exemption. Not only they will have to submit their papers three times a month, many of the items produced mostly by small and medium enterprises have been brought under the higher tax slabs. It is pertinent to note that it is these enterprises which employ most of the industrial workers in the country. GST thus represents a cruel blow on the employment generation. Higher tax rates would devastate many of these industries while paper work would endanger most of the small enterprises. GST is being touted as “avoiding tax on tax” something that was propagated about VAT which has now been assimilated into the new GST regime. This avoidance entails large amount of account keeping, sale and purchase through select channels and this makes products of the large production chains taking their inputs from other sources relatively cheaper. Large number of small enterprises get their inputs from informal sector and hence would end up paying higher taxes on their products. GST thus favours the large enterprises over small but the large enterprises are not generating much employment.

Proposed tax reforms with even revenue neutral rates favour the large scale enterprises, while GST proposes increase in indirect taxes to higher level. Govt. has abandoned even pretense of lowering the taxes.

A number of industries which employ a large number of workers are facing closure due to high tax burden being proposed under the GST. Obviously along with small entrepreneurs, workers too would suffer being rendered unemployed and unable to find alternate employment. Workers of these enterprises would face more hardships as the owners would transfer the entire new burden of GST onto the shoulders of workers through further depressing their wages and depriving them of other benefits. Govt. too wants to push the owners towards that course by further diluting the labour laws. Owners of these sectors are already agitating against GST. Similar is the case of shopkeepers and traders whose burden would increase and they too are in struggle against imposition of GST.

GST also represents a very serious and crude blow on the federal structure, even to the extent it is embodied in the Indian Constitution. Under the slogan of “One nation, one market, one tax” GST denies the state govts. right to levy taxes even for expenditure on social sectors. While the state Govts. led by ruling class parties also increase the burden on the people, GST would keep the monopoly of deciding tax rates with the Central Govt. which would wield enormous power in deciding the tax rates. It would reduce state govts. to municipalities. In fact Indian ruling classes have been striving for GST to undo the federal structure which they were forced to concede due to aspirations of the people during struggle against British colonial rule. But the Indian ruling classes to whom the power was transferred, have systematically sought to render them inoperative and to undo them when opportunities arose. Their striving is for a strong unitary state wedded to protecting the interests of imperialists, big capitalists and big landlords. Foreign companies have long been demanding that Indian Govt. abolish different tax rates and all enterprises should be brought under the same tax regime for providing “level playing field”. Indian Govt. has taken this step also to attract further FDI which the Govt. is projecting panacea for all the ills plaguing the economy and hampering economic growth.

It is being claimed by apologists of corporate that GST would favour poorer states as these are mostly consumer as compared to states where industrial production is located. But with higher tax rates these would not mean any benefit, rather the consumers i.e. people of these states would suffer due to GST.

Indirect taxes constitute a very significant part of the prices paid by the people, making over a third of the prices. While taxes must come only from the surplus value/product added by the workers/producers, indirect taxes act on the wages and other incomes by the labouring masses who ultimately pay for the bulk of indirect taxes. While there is a strong case for abolition of indirect taxes to lower the prices of the goods and services, Indian Govt. is increasing them in the name of GST.

GST is yet another example how the ruling classes are attacking the people. Though they chant the mantra of growth, but their essential quest is for increasing profits of corporate and for this they do not hesitate to take the measures which hamper the economic growth. Demonetization was one such step which has proved in practice to have burdened the common people and hampered growth. This impediment to growth has now been demonstrated by slackening of economic growth since demonetization which only proves that the measure was taken not in the interest of the people or economy but in the interest of corporate. GST is yet another example of such measure.

In fact this increasing of Central Govt. revenues at the expense of the people says much about the state of fiscal situation. The Govt. wants to augment its revenues to increase expenditure on the weapons of repression, on security forces to crush the people’s movements and to strengthen the bureaucratic apparatus which is parasite over the people, which sucks and squeezes blood of the very people in whose name it rules.

RSS-BJP led NDA is celebrating ushering of GST as an occasion of great importance and hence has decided to usher it in at midnight through a Parliament session. Earlier this was done only on the occasion of transfer of power in 1947 and its remembrance later. But RSS-BJP which had deliberately kept themselves away from the anti-colonial movement, are now making this most sinister attack on the people and federal structure as a moment of commemoration.

CPI(ML)-New Democracy condemns increase in the tax burden on the people through GST and also condemns the abrogation of fiscal rights of the states. CPI(ML)-New Democracy supports the struggles of the small entrepreneurs and workers against loss of jobs and business. CPI(ML)-New Democracy calls upon the people to reject this anti-people measure and intensify their struggle against anti-people policies of the Govt.

Central Committee,

CPI(ML)-New Democracy

June 30, 2017