Beware when crocodiles smile.

Dancing in the streets, shouting from rooftops and politicians exchanging sweets. Why? Because the Goods and Services Tax Bill, also known as GST, has been passed. This will combine indirect taxes levied by the central and state governments, such as excise, VAT, sales tax, luxury tax, entertainment tax, cesses and surcharges. We are told that a combined tax will reduce the overall tax rate for consumers so we, the people, will gain. If so, why are politicians so happy? We have to remember that politicians in India have only one aim in life and that is to get elected any which way, so that they can live in lavish bungalows provided by the government and draw magnificent perks, that will make a US Senator drool. To get elected they have to promise handouts to their vote bank, ranging from laptops to gold. Of course, if one party promises laptops you have to promise even more to lure voters, so the BJP promised laptops, color TVs and scooters in the Bihar election. And lost, heavily. All these handouts have to be paid for. We are being lulled by the lure of lower taxes on goods, although services will become more expensive, but politicians are celebrating because they think that GST will increase tax collections by ensnaring small businesses, which are avoiding taxes at present. Left wing economists are sceptical because they think that poor people may suffer. Alcohol, fuel, real estate, civil work, construction for factory and electricity are not covered by this act. Regional parties like to supply free electricity to farmers and the poor, resulting in accumulated debts of Rs 4.37 trillion for power distributors and losses of Rs 600 billion every year. The central government has started a scheme whereby states will issue bonds to borrow money from the market to pay off the debts. On the other hand taxes are very high on alcohol, fuel, factories and real estate already so scope for increase maybe limited. Some states charge a professional tax on every business and tolls on roads, taxes on taxis and road tax on vehicles maybe increased at will because they do not affect the poor. At present a company providing services in different states has to file consolidated returns 4 times a year but under GST such a company will have to file returns in each state, and presumably the center, every month. Each company will need an army of accountants. Small mom and pop enterprises have no hope of complying with such complicated regulations and will fall victim to predatory tax fellows. A lot of small businesses may have to shut down, decreasing competition and allowing big companies to increase prices at will. When crocodiles smile we should be wary.