Government losing revenue due to GST: Bibek Debroy
Calcutta Chamber of Commerce here, he however said that GST has led to a lot of simplification.
«The ideal GST is one that has a single rate, and it was meant to be revenue neutral. When it was introduced, there were some calculations by the Ministry of Finance then that said, in order to be revenue neutral, the average GST rate must be at least 17 per cent.
»The average rate now is 11.4 per cent.
So because of GST, the government is losing revenue," the eminent economist said.
Debroy said the public as well as members of the GST Council want the 28 per cent tax rate to come down, but «no one wants the 0 per cent and 3 per cent tax rates to go up».
«That way, we will never have a simplified GST,» he said at the 'Special Session on Resilient and Self-Sufficient India'.
A «lot of abuse» of the GST provisions was also taking place, he said without elaborating.
On direct taxes, the EAC-PM chairman said the eventual goal of tax reforms should be the complete elimination of all exemptions.
Any exemption makes life more complicated, increases compliance costs and leads to litigations, he said.
«If the government needs to spend, it needs revenue… 10 per cent of GDP must be spent on health and education, 3 per cent on defence and 10 per cent on infrastructure. However, we as citizens pay around 15 per cent of GDP as taxes.
