Majority surveyed agree that GST will be a good source of income for the government but personal taxes and wastage need to be reduced.
Budget2014 Feature
KUALA LUMPUR: The controversial Goods and Services Tax (GST), which is expected to be announced in the 2014 budget next month and implemented in 2015, has received the nod from members of the public.
In a random survey by FMT, Malaysians conceded that the consumption tax was necessary to enhance the government’s revenue and rein in the budget deficit, which stands at RM 14.9 billion.
“My heart says no to GST, but when I look at it logically, GST can become a source of income for the country… as long as it doesn’t burden the rakyat to the point that we are unable to feed ourselves, then I can accept it,” said Nor Atiqah Mohd Zaini, 24, an account executive at a public relations agency.
The GST is a tax imposed on goods and services at every production and distribution stage in the supply chain, including importation of goods and services, according to the Finance Ministry.
First announced during Budget 2005, its implementation was deferred to allow the government to obtain more feedback from the public. It has since received mix reactions, with many fearing that the tax would burden the lower class.
But with the introduction of the GST appearing more inevitable, the public have apparently resigned themselves to the new tax system, which is set to replace the existing sales tax of between 5% and 10% and the service tax of 6%.
“I agree with this tax if it can reduce the budget deficit, and is not spent on something totally useless like ‘more projects to develop Malaysia’,” quipped Mohamed Hariz, 33, a lecturer at a local public university.
“We sometimes, as good citizens of Malaysia need to shoulder some of the burden… but the government needs to think of strategies first before desperately posing new taxes on the masses.”
Tan Lee Mei, 27, a massage therapist, said: “I agree with the tax because it can improve our economy. But I heard they’re starting with 6%-7%, which is too high for people with lower income. The tax should be lower.”
Reduce income tax
Across the causeway, Singapore’s GST rate currently stands at 7%, from the initial 3% in 1993, according to tax experts. But local experts have reportedly called for a lower rate of 4% to 5% for Malaysians, to encourage wider public acceptance.
On the Budget 2014 websites, netizens urged the government to implement the GST immediately, while simultaneously reducing the income tax rate.
“…Eventually it’s in every middle class tax payers mind to move to another country because the taxation system is flawed! Hope the government will introduce GST and lower income tax,” netizen “Rajesh” posted on the website.
But the government has yet to announce whether income taxes will be lowered in tandem with the introduction of the GST.
Nor Atiqah agreed that the GST would take a toll on peoples’ pockets, but pointed out that “if you can buy something, you can pay for it.”
“With the tax in place, there will be differences in how we spend: we’ll be calculating the tax, evaluating whether a purchase is really worth it. If you don’t feel it’s worth it, you have to work smart and find a cheaper alternative.”
Tan echoed her views, but Mohamed, who has a family to feed, was more cynical. “In the short term, I would definitely feel the ‘difference’ in paying more. In a long run, this will be tolerated because that’s how it works, isn’t it?” he said.
“We are going to be psychologically influenced and later on feel nothing, even numb, about this tax.”
Mohamed said before introducing the GST, the government should address unresolved issues that had cost taxpayers’ millions of ringgit, such as the National Feedlot Corporation scandal.
“The government needs to do their part, such as saving money, and to be seen as doing their part. Then only after that, the rakyat would feel this sort of taxes is needed to be imposed in order to save the nation’s economy.”
Tan urged the government to study the tax rates to ensure they were in line with the income of the lower to middle classes, as they would be hit the hardest by GST.
Meanwhile, Azhan Hasbullah, who works with Petronas, pointed out that the government, has to work on its communication skills with regards to the GST.
“The Malaysian government’s communication is awful, so, yeah, they have to improve on the communication. For example, be firm – not everything is political.
“If they think its good, which it is, go for it. We have experts to implement it and it is not rocket science, as many countries have implemented it.”
[This is part of a continuing series in the run-up to the Budget 2014 to be tabled by the Finance Minister on Oct 25.]
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