India cuts tax rates on some goods under national sales tax

The council has so far taken more than 190 items, including washing machines and leather goods, out of the highest tax rate. (File/AFP)
Updated 22 December 2018

India cuts tax rates on some goods under national sales tax

  • Modi is seeking a second term in next five months amid voter frustration over the abrupt implementation of a nationwide goods and services tax (GST)
  • The GST council agreed to lower the tax on some goods including televisions, batteries and movie tickets

NEW DELHI/MUMBAI: India slashed the sales tax rate on over 20 items on Saturday in a move aimed at appealing to traders and the middle class after Prime Minister Narendra Modi’s ruling party lost elections in five states.
Modi is seeking a second term in next five months amid voter frustration over the abrupt implementation of a nationwide goods and services tax (GST) in July 2017 that has resulted in job losses for thousands of workers in small businesses.
The GST council, headed by India’s finance minister Arun Jaitley, agreed to lower the tax on some goods including televisions, batteries and movie tickets.
The council cut tax rates on six items from the highest tax rate of 28 percent to 18 percent and on one item — wheelchairs and parts — to five percent.
Most other items saw tax rates cut from 18 percent to 12 percent and five percent.
The council has so far taken more than 190 items, including washing machines and leather goods, out of the highest tax rate. Only 34 items — particularly luxury goods — remain in the top slab of 28 percent.
“It is decided to retain sin (such as alcohol and tobacco) and luxury goods in 28 percent bracket. Cement and some auto parts are also still in 28 percent slab,” Jaitley told reporters.
On Tuesday, Modi said the government was planning to cut the number of items taxed at the highest rate so that over 99 percent of items, with the exception of luxury goods, come under the 18 percent or lower rates.
A report by the country’s largest bank State Bank of India estimated that federal and state governments could face a shortfall of about 900 billion rupees ($12.83 billion) in GST tax collections in the current fiscal year against the budget target of 12.9 trillion rupees.


Mexico objects to labor enforcement provision in North American trade deal

Updated 8 min 1 sec ago

Mexico objects to labor enforcement provision in North American trade deal

  • Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage
  • US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico

MEXICO CITY: Mexico’s deputy foreign minister, Jesus Seade, said on Saturday he sent a letter to the top US trade official expressing surprise and concern over a labor enforcement provision proposed by a US congressional committee in the new North American trade deal.
Top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of a quarter-century-old deal, aiming to improve enforcement of worker rights and hold down prices for biologic drugs by eliminating a patent provision.
How labor disputes are handled in the new United States-Mexico-Canada Agreement (USMCA) trade deal was one of the last sticking points in the negotiations between the three countries to overhaul the agreement.
Intense negotiations over the past week among US Democrats, the administration of Republican US President Donald Trump, and Mexico produced more stringent rules on labor rights aimed at reducing Mexico’s low-wage advantage.
However, an annex for the implementation of the treaty that was presented on Friday in the US House of Representatives proposes the designation of up to five US experts who would monitor compliance with local labor reform in Mexico.
“This provision, the result of political decisions by Congress and the Administration in the United States, was not, for obvious reasons, consulted with Mexico,” Seade wrote in the letter. “And, of course, we disagree.”
USMCA was signed more than a year ago to replace the North American Free Trade Agreement (NAFTA), but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before voting.
The letter, released on Saturday, is dated Friday and addressed to US Trade Representative Robert Lighthizer. Seade said he would travel to Washington on Sunday to raise the issues directly with Lighthizer and lawmakers.
“Unlike the rest of the provisions that are clearly within the internal scope of the United States, the provision referred to does have effects with respect to our country and therefore, should have been consulted,” Seade wrote.
Both Canada and the US House Ways and Means Committee said the deal included a mechanism for verification of compliance with union rights at the factory level in Mexico by independent labor experts.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which became public only on Wednesday.