India's New Tax Is Too Complicated

As anyone who’s attended an Indian wedding knows, we far too often leave vital organizational tasks till the last minute, then tackle them all in an enormous, frenetic rush. The countdown to the July 1 deadline for the introduction of India's new goods and services tax, or GST, feels a lot like that. This is perhaps India’s most comprehensive and revolutionary tax reform ever. Yet till just a few days ago, nobody had any idea about what would be taxed at what rate, nor how inflation might or might not be affected.

Last week, central and state finance ministers from across India -- who comprise the GST Council, which under the new tax law has to make decisions about tax rates -- met for two days and thrashed out what almost all the rates will look like. But the long list of different taxes that emerged from their summit meeting is emblematic of how the economic potential of this tax reform has been watered down almost to nothing by successive political compromises and calculations.