12 October 2023 : The Hindu Editorial Notes PDF
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.
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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