India introduces key tax reform bill

India's government introduced a wide-ranging tax bill into parliament on Tuesday, but opposition to the move threatened to derail what is one of the coalition's most ambitious reforms of its second term.
In a sign of how corruption scandals are hindering the government, opposition lawmakers immediately forced an adjournment by demanding a debate on accusations Prime Minister Manmohan Singh lied to parliament about a cash-for-votes scandal.
The Hindu nationalist Bharatiya Janata Party (BJP) has accused Singh of misleading parliament after he denied a WikiLeaks cable that said his government paid bribes to lawmakers to win a confidence vote in 2008.
That controversy was the latest in a slew of corruption scandals, including accusations the government lost up to $39 bln in the selling of telecoms licenses for kickbacks that have overshadowed Singh's second term and halted most reforms.
The bill to amend the constitution and introduce a nationwide Goods and Services Tax (GST) aims to cut business costs and boost tax revenues. But it has been delayed by two years and it will almost certainly miss an April 2012 deadline for implementation.
The GST bill needs approval of two-thirds of parliament and half of India's 28 states to become law. It will first go before a committee before returning to parliament for a vote, which is unlikely to happen in the current session that ends on Friday.
Many opposition-ruled states oppose the bill and there are worries the tax reform will give too much power to the federal government over local states.
Further scandals and a host of state elections this year could close any window of opportunity for the controversial bill to be adopted.
While the government is unlikely to fall over the corruption scandals — no main party wants to go to the polls only two years after the last general election — the scandals have hit India's investment climate and delayed a host of reform bills.
The BJP effectively halted the last session of parliament with its demands for a parliamentary probe into the telecoms scam, while the current budgetary session has seen several adjournments amid protests from the opposition over the WikiLeaks reports.
Other bills could also be introduced this session, including a land acquisition bill to make it easier to buy land for industry and infrastructure developments, as well as a bill that shares 26% of mining profits with local communities.
The current session will almost certainly see the formal passing of the budget despite proceedings being disrupted.
"Let the finance bill (budget) be passed, and then we can have a short discussion (on the Prime Minister)," Finance Minister Pranab Mukherjee, the government's main troubleshooter, appealed to opposition lawmakers.