When I was a young journalist in Bombay (now Mumbai), there was an event that evoked a lot of humour and pained resignation. It was 1986 or perhaps 1987. The Octroi tax staff in the city went on strike over some issues. Since commerce does not, and cannot, stop in Mumbai, military and paramilitary personnel were deployed at the Octroi centres. The daily collections went up by more than 10 times the usual average. The strike was withdrawn.
In case you are unaware, in the pre-Goods and Services Tax (GST) era, Octroi was collected for inter-state transportation of goods, and by large municipal corporations. It was riddled with corruption, as the Mumbai episode proves. To understand the transformation that GST has ushered in, here is another folklore. During the Octroi days, after the dizzying popularity of civil services, the most sought-after Government jobs were as excise inspectors in the States. The latter’s “dowry” value was as enormous as the former. This is no longer true.
The leader of Opposition calls GST the Gabbar Singh Tax. The Government dubs it the Good and Simple Tax. The reality, as usual, lies somewhere between the two. It is in this context that one needs to look at the moves to further simplify GST by trimming the rates down to two, 5 per cent and 18 per cent, with a possible sin tax of 40 per cent on goods like tobacco. After GST came into being in July 2017, States retained the right to impose taxes on petroleum products, alcohol and tobacco. When the figure involved is `24 lakh crore (monthly GST collections hover around `2 lakh crore), there is bound to be controversy, corruption and confusion.