Here's what's wrong with the GST Council proposed by the new bill

The Constitution amendment bill introduced in the Lok Sabha, among other things, seeks to create a Goods and Services Tax Council (GST Council) comprising the Union Finance Minister, Union Minister of State in charge of Revenue or Finance and a member from each state. The meetings of the GST Council can proceed with a quorum of 50 percent and decisions will be taken with a at least three-fourth weighted majority voting for a resolution. So far so good but what is to follow would show how the proposed law is susceptible to throwing up potential inequities. The votes cast by states would beget a two-third weightage whereas the votes cast by the central members would get a one-third weightage. Now the problem is the Bill assumes that the two central government members on the council would think and vote alike which is why it goes on to give a 33.33 percent in favour of the resolution if it’s approved and 0 percent if disapproved. What happens should there be a deadlock? It is not necessary that the two members should have unanimity in the matter. As of now there is no reason to fear any discord between the two but who knows if political issues in Maharashtra might cast its shadow on the central ministry, and the Shiv Sena might demand the second member’s post so as to be able to be in the thick of things on the seminal issue of GST. [caption id=“attachment_2014305” align=“alignleft” width=“380”] AFP Image[/caption] In any case a law should be resilient enough to provide for all contingencies including in the future. There is no guarantee that all future governments will be formed with single party majority. The coalition government at the centre would be even more vulnerable to such pressure from coalition partners. Even otherwise it is against parliamentary democratic principles to fuse two votes into one. Therefore the bill must be changed to provide that if one central member is in favor of the proposal, the weightage given to the central government votes would be 16.17 percent. Let us take an example. There are 29 states. Let us say 26 vote in favor of a proposal and 3 against. Central government members are divided, with one voting in favor and the other against. What would the final result? At present, the Bill says it is either 33.33 per cent or 0. Since there is no unanimity between the two central members, they would get 0. The weightage given to state votes would be calculated as follows: 26 * 66.67 =59.77 Even with such an overwhelming state vote, the proposal would be defeated whereas had the central vote been scientifically assigned the proposal would have been through – 59.77+16.17=75.94%. The either all or none approach towards central government votes is responsible for the defeat of the proposal in the above example. It could well be the Shiv Sena minister in the Centre who is in favor of the proposal backed by an overwhelming majority of states The short point is, a formula should be scientifically designed lest significant decisions are later on called into question. The GST Council is going to be a standing committee vested with enormous powers—the rates of taxes, exemptions for products and services, the threshold limit below which assessees would be exempted, the list of backward states and above all when to bring petroleum products within the fold of GST. The formula is strange for another reason—it does not treat states as cattle adhering to herd mentality. A dissenting vote gets its due recognition whereas the dissenting vote has the quaint effect of even reducing the positive vote to zilch when the central votes are counted. A strange electoral dispensation indeed!