Topic Of The Day:-“History of GST”
Introduction of the GST is an important reform and is a standard policy recommendation for every country going in for the structural adjustment programme of the International Monetary Fund. This has been a major money spinner and a source of productivity gain. According to Michael Keen, of over 165 countries which have adopted GST in one form or another, only five have repealed it (Belize, Ghana, Grenada, Malta and Vietnam), but have reintroduced the tax later. The GST has taken centre-stage in many countries and is considered important in view of the competitive reduction in corporation tax rates due to high mobility of capital. It is also true that there is no “one-size fits all” GST and each country has to adopt the structure depending on political bargains and operational feasibility. It is a major reform, and even as every country makes a lot of preparations before it is introduced, it takes time to smoothen the rough edges and settle contentious issues. International experience shows that some features of the reform are inherently desirable. It is important not to have too low thresholds. In fact, reasonably high thresholds will reduce the compliance burden to a large number of small businesses without much impact on revenue. Richard Bird and Pierre-Pascal Gendron, after a detailed examination of a number of countries adopting GST, suggest that in developing countries, a threshold closer to $100,000 would eliminate 75% of the taxpayers with a revenue loss of less than 4%. (See Bird and Gendron, The VAT in Developing and Transitional Countries, Cambridge University Press, 2007). Another desirable feature of a successful GST is to have fewer rates. Multiple rates create classification problems, are harder to administer and would require the general rate of tax to be higher. It would also invite a lot of lobbying by special interest groups. Third, it is important to prepare well before the plunge. Most countries take at least two years to prepare for the introduction of reform to ensure a smooth transition. This is particularly necessary for developing and testing the technology platform, educating the tax collectors and tax payers and to avoid any anomalies in the structure of the tax.
MEANINGS AND WORDS
1) Repealed
Meaning: Revoke or annul (a law or act of parliament).
Example:”The legislation was repealed five months later”
Synonyms: Revoke, Rescind
Antonyms: Introduce, Enact
2) Bargains
Meaning: An agreement between two or more people or groups as to what each will do for the other.
Example:”Bargains between political parties supporting the government”
Synonyms: Agreement, Arrangement
3) Contentious
Meaning: Causing or likely to cause an argument; controversial.
Example:”A contentious issue”
Synonyms: Controversial, Disputable
4) Lobbying
Meaning: Seek to influence (a legislator) on an issue.
Example:”They insist on their right to lobby Congress”
Synonyms: Importune, Persuade
5) Plunge
Meaning: Fall suddenly and uncontrollably.
Example: “A car swerved to avoid a bus and plunged into a ravine”
Synonyms: Crash, Plummet
6) Anomalies
Meaning: Something that deviates from what is standard, normal, or expected.
Example:”There are a number of anomalies in the present system”
Synonyms: Oddity, Peculiarity
