Journal Press India^®

Author Details ( * ) denotes Corresponding author

This paper investigates the political economy of taxation reform in India through an analysis of the federal dynamics underlying the implementation of two major fiscal policies—Value Added Tax (VAT) and Goods and Services Tax (GST). By examining state-level variations in adoption timelines and responses to both reforms, the paper highlights how ideological positioning, alliance configurations, and central-state relations critically influenced policy outcomes. For VAT, a joint distribution of attributes model quantitatively demonstrates a strong association between the ruling party at the state level and their adoption decisions. The analysis is deepened through a binary logit regression model, which affirms that political allegiance was the most significant determinant of early or delayed implementation, even over relevant economic indicators. The results emphasize the inseparability of fiscal federalism and political contestation in India’s reform trajectory, making a case for viewing taxation as a politically negotiated process.

Keywords

Indirect Taxation; VAT; GST; Fiscal Federalism; Logit Regression

1. Bean, C. & McAllister, I. (1999). The GST and all that. AQ: Australian Quarterly, 71(3), 46–49. Retrieved from https://doi.org/10.2307/20637826
2. GST and autonomy of states. (2010). Economic and Political Weekly, 45(4), 5–6. Retrieved from http://www.jstor.org/stable/25664030
3. Jain, A. (2021). Goods and services tax (GST) and plastic recycling. In Plastic recycling: Decoded (p. 51). Centre for Science and Environment. Retrieved from http://www.jstor.org/stable/resrep37920.11
4. Mukhopadhyay, S. (2005). VAT at last – In half of India. International VAT Monitor, 16(5). Retrieved from https://us.ibfd.org/shop/journal/vat-last-half-india
5. Musgrave, R., Chang, C.-H., Riew, J. & Sicat, G. (2019). Taxation and economic development among pacific asian countries (1st ed.). Taylor and Francis. Retrieved from https://www.perlego.com/book/1478897/taxation-and-economic-development-among-pacific-asian-countries-pdf
6. Refaqat, S. & Mohsin, H. M. (2005). Redistributive impact of GST tax reform: Pakistan, 1990–2001 [with comments]. The Pakistan Development Review, 44(4), 841–862. Retrieved from http://www.jstor.org/stable/41261134
7. Sharma, J. V. M. & Bhaskar, V. (2012). A road map for implementing the goods and services tax. Economic and Political Weekly, 47(31), 68–75. Retrieved from http://www.jstor.org/stable/23251632
8. Shoup, G. & Cal, S. (1990). Edited value added taxation in developing countries. Washington D.C: The World Bank.
9. Sinha, M. (2019). The effects of GST on the handloom sector. Social Scientist, 47(5/6), 63–70. Retrieved from https://www.jstor.org/stable/26786188
10. Umar, A. (2010). Reformed GST: Challenges and opportunities. The Pakistan Development Review, 49(4), 765–767. Retrieved from http://www.jstor.org/stable/41428689