India is to hold a special midnight session of parliament to mark the launch of its new national Goods and Services Tax, a sign of how much significance it's attaching to what's billed as the biggest fiscal reforms in decades. As Kate King reports, the GST will replace about 20 federal and state taxes while unifying a $2 trillion economy and 1.3 billion people into a single market.
India's Prime Minister swept to power in 2014 promising to get the economy moving. Now he's carrying out that pledge with the biggest economic shake-up in 70 years; The introduction of a goods and services tax. Set to come into effect on Saturday. (SOUNDBITE) (English) SECRETARY GENERAL OF A LEADING TRADERS BODY - THE CONFEDERATION OF ALL INDIA TRADERS, PRAVEEN KHANDELWAL, SAYING: "In the current regime we have more than 17 types of taxes of central government and state government and all these taxes are being subsumed under GST (Goods and Services Tax) and we will be answerable to only one authority." But unifying India's 2 trillion dollar economy into a single market, is a frightening prospect for millions of small businesses. Considered a developing country, many in India don't even have access to a computer to register under the new online tax regime. Others are worried hiring accountants and technical staff could substantially dent their bottom line. (SOUNDBITE) (English) ECONOMIST AND PROFESSOR AT DELHI-BASED NATIONAL INSTITUTE OF PUBLIC FINANCE AND POLICY, N.R. BHANUMURTHY, SAYING: "GST could improve the revenues of the government and also, if that happens, we should expect the government to bring down the tax burden on the people and at the same time broaden the tax base. We bring a lot of people into the tax information network and that will help government to spend more money on the welfare programmes." While there's no official estimate of the potential fiscal gain, some tax experts say it could lift the tax-to-GDP ratio by as much as 4 percentage points. The Government says it will also make India a far easier place to do business, especially as it looks to bolster trade ties internationally. And while the scheme is complex, with different rates dependent on products. What is clear, is that we can expect plenty of hiccups along the way.