The Hindu Editorial

12-October-2023

1. UN Security Council reform is a song in a loop.

Topic: GS2 – International organisations

Context:

• The issue of fundamental reforms at the United Nations (UN) has resurfaced at the ongoing General Assembly session.
• Concerns raised by various leaders and the UN’s Secretary-General António Guterres about the need for reforms.

Unjust Geopolitical Reality:

• The five permanent members (China, France, Russia, the United Kingdom, and the United States) hold veto power, a privilege granted after World War II.
• The composition of the Security Council reflects the geopolitical realities of 1945, with only 15 members in a world with 193 member-states.
• Europe holds a disproportionate number of seats, while large contributors like Japan and Germany are excluded from permanent membership.

Equity and Injustice:

• Many countries contribute significantly to the UN’s budget but are not represented as permanent members.
• India, with its size, economic contributions, and peacekeeping operations, remains excluded.

Stalemate in Reform Efforts:

• The Security Council is in need of reform to reflect the contemporary world.
• While some countries advocate for change, others resist reform due to competition, historical grievances, or envy.
• The UN Charter sets a high bar for any amendment, requiring a two-thirds majority in the General Assembly and ratification by member states.

Complex Rivalries and Hurdles:

• Rivalries between nations, such as India and China, or Brazil and its Latin American neighbors, create challenges in reform efforts.
• Africa, with 54 member-states, faces difficulties in deciding which countries should hold permanent seats.
• Proposals like creating “semi-permanent members” for limited terms have found little support.

Continued Gridlock in the UN:

• The lack of reform has led to gridlock in the Security Council, as seen in issues like the Ukraine conflict.
• Russia’s frequent use of the veto power has blocked resolutions on various matters.
• This gridlock raises questions about the effectiveness and relevance of the UN system in addressing global challenges.

Importance of UN’s Role:

• Despite its shortcomings, the UN remains the primary global platform for international cooperation and diplomacy.
• The debate over reforms highlights the urgency of ensuring the UN can effectively address current global challenges.

Question: Discuss the challenges and obstacles in the path of United Nations reform, particularly regarding the composition of the Security Council. Analyze the implications of this reform deadlock.

Source: https://www.thehindu.com/opinion/lead/un-security-council-reform-is-a-song-in-a-loop/article67408819.ece

2. Fixing grey areas is good, but the GST regime needs a broader reform plan

Topic: GS3 – taxation

Context:

• The GST Council addressed long-standing tax ambiguities and made rate adjustments.

More about this news:

• The GST on molasses was reduced from 28% to 5% to lower cattle feed costs and improve cash flows for sugar mills.
• The decision not to tax extra neutral alcohol (ENA) for alcoholic liquor was significant.
• The GST Appellate Tribunals’ age norms were harmonized with other tribunals for operational efficiency.
• The Council will meet in the future to discuss perspective planning on the GST Compensation Cess and its potential replacement with a surcharge.
• The GST Compensation Cess was initially introduced to compensate states for revenue losses during the first five years of GST.
• Its extension beyond March 2026 raises the need for a broader rationalization of GST’s complex multiple-rate structure.

Reforms needed in GST regime in India:

• Single Tax Rate: Simplify the GST structure by moving towards a single tax rate for most goods and services to reduce complexity.
• Rationalize Exemptions: Review and rationalize the list of exempted items to broaden the tax base and reduce the number of exceptions.
• SME-Friendly Compliance: Streamline and simplify compliance processes, particularly for small and medium-sized enterprises (SMEs).
• Reduce Compliance Burden: Implement measures to reduce the compliance burden, such as reducing the number of returns and simplifying the filing process.
• Anti-Profiteering Framework: Strengthen the anti-profiteering framework to ensure that businesses pass on the benefits of reduced taxes to consumers.
• Clarity on Real Estate: Bring clarity to the GST framework for the real estate sector, which currently faces complex rules.
• Incentives for Digital Payments: Encourage digital payments and discourage tax evasion by offering incentives and disincentives.
• Review Compensation Cess: Evaluate the need for continuing the GST Compensation Cess and consider alternative revenue sources for states.
• GST on Petroleum Products: Extend GST to petroleum products to bring transparency and uniformity in their taxation.
• Simplified Refund Process: Simplify the GST refund process for exporters to expedite their claims.
• Dispute Resolution Mechanism: Strengthen the dispute resolution mechanism to reduce litigation and promote tax certainty.

Challenges to these reforms:

• Revenue Implications: Implementing some reforms might have revenue implications for the government, potentially leading to short-term revenue losses.
• Interstate Disparities: Addressing disparities in GST revenue distribution among states may face resistance from states benefiting under the current system.
• Technical Challenges: Implementing complex technical changes in the GST network and compliance procedures could pose operational challenges.
• Industry Opposition: Reforms affecting specific industries may face opposition from affected sectors, potentially leading to political resistance.
• Coordination Issues: Coordinating reforms among diverse stakeholders like central and state governments, industry associations, and taxpayers can be challenging.
• Legal Hurdles: Reforms may require amendments to GST laws and regulations, necessitating a complex legal process.
• Public Perception: Gaining public and political support for reforms, especially those affecting consumer goods, is a challenge.
• International Considerations: Reforms affecting trade agreements or international commitments may face complexities in negotiation and implementation.
• Economic Uncertainty: Economic uncertainties, such as the impact of global economic trends, can complicate the forecasting of reform outcomes.
• Administrative Capacity: Ensuring government departments have the capacity to implement and enforce reforms effectively is crucial.

Question:  Discuss the key reforms required in the Goods and Services Tax (GST) regime in India to make it more efficient, simplified, and taxpayer-friendly. What are the challenges in implementing these reforms, and how can they be addressed?

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