We are all upbeat about passage of GST related constitutional amendment now a reality. There is one thing that hasn’t crossed many mind is the fact that its very regressive in nature. It would make some essential items become costly and some of the luxury items cheaper. For a country that has a good percentage still under the poverty line, its not a welcome thing to happen therefore.
It is however certain that tax administration will be easy and tax avoidance will be tougher, so clearly we have to welcome such kind of tax regime and without many items excluded from its ambit. So what remedial measure can be adopted is the question. In my opinion raising or income tax by 5% plus increasing wealth tax by 0.5% will be OK; this will enhance the revenue which comes out of the pocket of rich and would enable the govt to grant relief in cash to the families that struggle to make ends meet.