“Single commodity and services tax panel cannot be …”: Economist Ajit Ranadi says that the current structure is “moderate progressive”

The reaction of the economist Agit Ranad on Saturday to a working paper that described the tax and services tax in India (GST) as “moderate progressive”. He said that such a conclusion will not be if the tax structure is unique and united.

“A very interesting discovery. If the commodity tax rate and services are unified, unique, and comprehensive (i.e. all goods and services), then as a comprehensive consumption tax, it cannot be progressive. For a simple reason is that spending on consumption for the poor as a share of their income is higher, so the relative burden of consumption tax is higher,” Ranad wrote on Lind.

He added that the commodity and services tax system in India does not cover the full economy and includes multiple tax panels, which may explain the results of the study. “But the commodity and services tax in India is not comprehensive (about 50 percent of GDP, including), and we have multiple price panels that are transmitted from zero to 18 and 28 and at higher rates on luxury goods. So because of the illogical nature, progressive rates, GST can be progressive in a moderate way. But it is definitely an uninterrupted discovery!”

Ranadi was responding to a leaflet by Sacchidananda Mukherje, a professor at the National Institute of Public Finance and Politics (NIPFP), who participated in a working paper in July, noting that “the tax of Indian goods and services is gradually moderately. The re -distributed effect on Indian commodity and services tax is positive, as inequality in consumption after taxes.”

NIPFP paper relies on data from family consumption expenditures in the National Survey office (NSSO) (HESS) 2022-23, which covers 2.6 families of the Lakh and 390 consumption elements in rural and urban areas. Although it does not include family income data, the paper raises the effect of goods tax and services based on the average monthly individual expenses (MPCE).

“Taxes on goods and services represent more than three fifths (62.3 %) of total tax collection in the public government in India,” says the paper. “GST contributes to half the total tax collection of goods and services; therefore, it is necessary to assess the distribution of GST across consumer groups.”

The results indicate that the bottom 50 % and 30 % of consumers bear 31 % of the burden of goods and services tax in rural areas, while the highest 20 % carry 37 %. In urban areas, the distribution turns slightly, as it contributes 50 % in the bottom by 29 %, 30 % of the middle 30 %, and the highest 20 % carry 41 %. Authors used several measures, including the Kakwani Index and the Reynolds-Smolesky Index, to measure progress.

Earlier this month, the works stated today that the commodity and services tax council may repair the current structure. The sources told Today TV that the Commodity and Services Tax Council may consider the collapse of the current multi -rate system in a SLAB -Perhaps 8 % -16 % -24 % or 5 % -14 % -24 %. Canceling a 12 % panel can raise the cost of commonly used elements such as mobile phones.

With goods and services tax revenues now, 2 router crores are constantly crossing – doubling levels for four years – Policy makers may have a financial space to try to simplify.