KOCHI: The implementation of GST may result in price rise and increase in inequality in the country, said Finance Minister Thomas Isaac here on Saturday. Speaking after the formal launch of the GST roll-out in the state at the international stadium, Kaloor, Dr Isaac said the reduction in the effective tax rate for luxury goods was not matched by a similar reduction in the rates of essential goods.
This can lead to the widening of inequality, he said. "Another risk factor is the possibility of price rise due to undue profiteering by traders. The central and state governments will have to take steps to prevent manufacturers and traders from taking advantage of the perception," he said. He told reporters on the sidelines of the function that the government planned an advertisement campaign giving pre-GST tax rates and price and post-GST tax rate and its possible impact on prices of essential commodities. "This is part of the effort by the government to create awareness among the people about effective tax rates coming down despite the increase in tax band in case of some goods," he said.
The effective tax rates for nearly 80-85 percent of goods have come down by eliminating the incidence of tax in the supply chain network. The Kerala government will develop its own Suvidha system of software facilitating small retail traders to migrate to the GST system, he added. The IT Mission will be asked to develop the software in association with National Informatics Centre (NIC).
The software could be developed in the next two months and it will be provided free of cost to the traders. "We have taken the decision on developing our own software and further details will be worked out with the persons concerned," he added. A state-level help centre will be set up for addressing the concerns of the traders. The government will also consider setting up a similar facility at the district level, he added.
Banking heavily on the GST for eliminating the revenue deficit of the state, Dr Isaac said the tax revenue in the state was likely to increase by Rs 3,000-4,000 crore in the current financial year. "Kerala, being a consumer state, will benefit much from the new tax regime and we are targeting a 20 per cent growth in tax revenue with the implementation of GST," he added. Given the current scenario, the only way for the state to increase its own revenue is the GST, he added.
