More money, more problems 💰

The GST on "sin goods" like tobacco, cigarettes, and aerated beverages could rise to 35% starting December—marking the first major GST rate restructuring since its introduction seven years ago.

The deets: a panel of ministers responsible to make the recommendation proposed the hike and will present their suggestion to the GST Council, which meets on December 21 to decide on the changes.

• The increase targets "sin goods," raising their tax rate from the current highest slab of 28%
• The proposal also suggests rates hikes for products like readymade garments, cosmetics, and luxury items

Zoom out: GOI’s goal is to simply collect the most possible revenue on price-insensitive products like luxury and leisure consumables.

But: critics fear that the move could deter consumption, potentially weakening economic activity. Over-taxation is also likely to turn the over-spenders cautious, potentially shifting behaviors permanently.

Worth noting: the panel did recommend lower tax-rates to a few items, such as common use items, as well as exemptions related to buys like insurance. And the sin-goods increase is meant to make up for that revenue shortfall.