India, Aug. 27 -- The Goods and Services Tax (GST), launched in 2017, was meant to be a "good and simple tax". Finance minister Arun Jaitley had rightly said during its launch, "There will be problems. We'll see where the shoe pinches as we go along and take steps." The GST regime is now in its ninth year - a good time to see if the shoe still pinches. Prime Minister Narendra Modi's Independence-Day proposal for a rationalisation of the rate slabs - 5%, 12%, 18% and 28% - may well prove to be an inflection point in the journey so far. Some reports have suggested a simpler two-slab structure of 5% and 18% for most goods could be in the offing. Three points are clear. One, there is a realisation that having a welter of rates is not consistent with the idea of a GST and some consolidation is desirable. (In a very diverse economy, it's impossible to have just one single levy and, therefore, some degree of multiplicity of rates is also inevitable.) Two, the government seems to be confident about slab restructuring. But this won't be a simple reordering exercise. Other crucial decisions will have to be taken, such as, what should happen to the compensation cess after its March 2026 expiry date. Third, a relook at the rates is inevitable now because of the looming 50% US tariff on India's exports. A reduction in rates will boost domestic consumption, helping cushion a much-feared fall in exports. Fixes along the way have surely toned up the regime, including steps to gear it more towards taxing imports and high-taxed items, rather than towards basic goods of daily necessity. The subscriber base has expanded to about 10.5 million. The ability of the Centre and states to together work out things has sustained the GST. The Centre, to be fair, has received far less cumulative GST revenue than the states because it has had to use all of the cess to compensate the latter to fulfil the guarantee of 14% revenue-growth over a pre-GST period of 2016-2017 base. A robust tax is one that is easy to pay and collect, costs less (levying a tax entails costs too), and isn't so onerous that it encourages evasion. It must be efficient because that's the whole point of a GST: A tax levied at the point of sale. The other purpose is, of course, to not tax the same good twice. That's why producers can claim credits for taxes paid on inputs. The government would do well to address the basic incongruity of a four-tiered tax system, which becomes five-tiered if one considers the zero-rated goods - not the same as exempt items because, on zero-rated export goods, businesses don't pay GST but claim input-tax credits. If one were to add the cess, then there are six rates given any cess effectively is a tax (the cess itself varies widely between 1%-280%). A simple way of assessing the GST's performance is to see the level of revenue it generates. Gross revenues however don't say much. Only net collections (total, minus the refunds to taxpayers) give us the real picture. Gross collections have been stellar from day one, trending at 6.5% or so of the GDP (using FY 2024-25 GDP at current prices), barring the pandemic period. They've been well above pre-GST levels. So these headline numbers stoke much enthusiasm. The net collection numbers, which the government began giving only in February 2024, tell a more modest story. They managed to reach pre-GST levels only around mid-2024, seven years after the GST launch, according to a recent study by economist Arvind Subramanian and others. The gap between gross and net is caused by refunds, payable to exporters as input tax credit. But why have refunds been so large as to cause the net revenue to fall? It is because we are a trade-deficit country where a lot of inputs (parts and components) for exported goods are first imported. The proposed rejig should be an opportunity to analyse these tax patterns better. Yet, the main reasons for a rationalisation is to have lower inflation and higher consumption, both of which should lead to better GDP growth. Higher GDP naturally leads to higher revenue. But a lowering of rates will undoubtedly blow a hole in total revenues. Will an anticipated tax buoyancy offset this loss? What should happen to the compensation cess after it expires in 2026? The Centre has hardly benefitted from the cess, first used as a fiscalisation tool to compensate states and, now, to pay off loans the Centre took on states' behalf to finance the pandemic shortfall. If abolished, it could leave an unmitigated hole in the Centre's finances. And yet, it's only after the cess's future is decided that we'll have a pure-play GST with new performance insights to offer....