Tax reforms: The road ahead

Abstract

It is not always true that all reforms will bring in benefits to the society which in itself is difficult to measure. Using cost to country model, the cost to Indian society for implementation of the Goods & Services Tax (GST) can be evaluated. Using the cost-benefit analysis, the gestation period for GST can be calculated. It is the minimal duration for which government must continue with the goods and services Tax (GST) structure before replacing it by new indirect tax reform to realise its true benefits. Though all the costs cannot be measured, one can get the estimates for real benefits & time duration to realise it. The corporate practice of cost-benefit analysis should be used for government policies to bring effectiveness as it is ultimately being charged to its citizens. GST will bring in new business practices as seen in case of supply chain system which will make it a little difficult to estimate correct benefits for the industry. Considering all the difficulties for cost estimation, though it seems to evaluate correct estimates, this framework can be used for general estimate of the cost to society.