Should GST cut lead to lower prices? Economics 101 for babus: Taxes are only one factor in prices

Fast food chain Subway was recently given a clean chit by the National Anti-Profiteering Authority (NPA), in a complaint filed against the company that it had increased product prices when GST rates on the restaurant sector were lowered. The NPA ruled that the cost of production for the company had increased because tax cuts on the final output prices were accompanied by a decision to disallow tax…