Publication: NSUNT
Date of publication: Jul 8, 2012
Section heading: Learning Curve
Page number: 010
THE Goods and Services Tax, or GST, is a form of
indirect tax collected at all stages of the production and distribution chain.
On Nov 26, 2009, Prime Minister Datuk Seri Najib
Razak announced that this much-anticipated GST would be implemented 18 months
after approval in a second reading in Parliament in March 2010.
This second reading, however, was postponed and the
GST Bill is instead widely expected to get its second reading after the coming
general election.
While much has been debated in the media, as well
as among politicians, on the implementation of GST, Professor Jeyapalan
Kassipillai, Head of Business Law and Taxation from Monash University Sunway
campus, believes that the GST is the way forward for Malaysia, and will be
beneficial to Malaysians as a whole.
Malaysia has had 15 years of continuous budget
deficit, and for 2012, the deficit is expected to be 5.2 per cent compared with
a high of 7.6 per cent in 2009. In layman's language, deficit means one is
spending beyond their means. The GST, when implemented, can be seen as a
reformatory move to jump-start the implementation of an efficient tax
administration that will be able to generate more revenue for the government,
which in turn will lower that deficit, said Prof Jeyapalan, who is also a
council member of the Chartered Tax Institute of Malaysia.
He believes that the implementation of GST will be
fair and beneficial to Malaysians of all walks of life.
Currently, Malaysia's concealed income, which
escapes the income tax net, is highly significant. But with the GST, which is a
self-policing system, there is a clear audit trail and it would bring about
greater tax compliance.
The zero-rating of essential items under the GST
will help relieve the poor, ensuring that the GST system remains equitable
where the tax burden should fall more on those who can afford it, and is
mitigated for those who are economically more vulnerable.
The GST does not have to burden ordinary folk, as
it all depends on its implementation. Our government has indicated that
selected essentials such as rice, sugar, cooking oil, flour, and domestic
transportation will be exempted, he said.
A study conducted in New Zealand shows that the
rich will proportionately pay more tax under the GST system, compared with the
existing system. Reason being, items spent by the rich will be subjected to
GST, and they will not be zero-rated and exempted.
He cited examples of other countries such as
Singapore, with a seven per cent GST rate, New Zealand's 15 per cent, the
United Kingdom's 20 per cent VAT and Romania at 24 per cent. The Malaysian
government has indicated that the GST will be imposed at a rate of five per
cent.
The GST, when implemented in Malaysia, can be seen
as a reformatory move to jumpstart the implementation of an efficient tax
administration.
Prof Jeyapalan has written and presented many of
his thoughts on the implementation of GST in Malaysia, and seeks to bring the
relevance and importance of this subject to his students in class.
Our students need to know about policies
implemented in the real world which will affect them directly. I always bring
in discussions on these topics to the lecture halls so they don't become just
book-smart, but industry-smart as well.
For more information on Monash University Sunway
campus, visit: www.monash.edu.my
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