Wednesday, October 23, 2013

Aye to the GST

Idris Jala is the government salesman trying to convince us that the GST (Goods and services tax) is good for the country and for Malaysians.

If you still don’t know what GST is, it is simply value-added tax. With the GST, anyone who can afford to spend money is taxed. This means that GST is applied across a wide spectrum of goods and services, without discriminating who the consumer is. In other words, GST doesn’t care which income group you belong to. GST is about mass participation of both taxpayers and non-taxpayers. On this score alone, I would support GST. 

But there’s a caveat and, that is, personal taxes must be reduced. And the “have-nots” are shielded. 

The GST is being proposed by the government to replace the current consumption tax, i.e. the sales and service tax (SST). GST will be imposed on all taxable goods and services consumed locally. Imported goods and services will also be subject to it. Of course, exemptions may be made by the government for essential items. 

Businesses should understand that GST is not a tax on businesses; for GST paid can generally be claimed as credits against GST charged on sales made. Therefore, the government must do the necessary to ensure that businesses are not using the GST as an excuse to raise prices! 

To insulate the lower-income group, the government can introduce compensationary measures to replace the burden of the GST. As for the others, they will have to pay as they consume. The more they consume, the more they pay! 

But there’s also a plus side. GST can benefit us if it is at a rate below 6%. I am thinking of foodies. Meals at restaurants are already subjected to a service tax of 6% and of course, we will pay less for the same meal – when there’s GST. That’s the theory, anyway. 

The government’s position is that GST is needed primarily to broaden the government's tax base. Or to put it in another way, it would help to significantly boost the country’s revenue. And that is true because only 1.2 million Malaysians are registered tax payers. There’s no need to think hard which group of Malaysians have been faithfully paying income taxes all this while. The majority of these people are the “pendatangs”! 

The GST has its critics. It has been loudly trumpeted that the majority of Malaysians are earning too little to pay taxes. That may also be true but let’s not forget those of us who have unfailingly been paying taxes, year in, year out. Like many middle class Malaysians, I am getting fed up too.

When we do implement the GST, we will join 170 other countries that have already administered this added value tax regime. Maybe as suggested by PKR’s Wong Chen, we can adopt the “slow and steady” approach and follow Singapore’s example. 

Singapore’s government had fixed the GST at three percent when it introduced the tax in 1994, before raising it to four percent in 2003 and subsequently to 7 percent in 2007. 

Malaysia has toyed with the idea of a GST for nearly a decade. The GST, delayed since 2009, is widely expected to be presented to Parliament this year again.In fact, the introduction of GST is seen as part of the government’s effort in reforming its tax structure towards a more efficient and effective taxation system.

1 comment:

Kevin Z said...

The problem is not pouring more water into the pot (budget)...
The problem is not plugging up the leaks (see Auditor General Report)

I don't mind contributing to the Government for developing the country. But I do mind wasteful, extravagant, foolish spending of our hard earned cash!