Posted on 25 October 2013 - 05:40am
PETALING JAYA (Oct 25, 2013): The Asian Strategy and Leadership Institute's Centre for Public Policy Studies (Asli CPPS) has recommended that the government introduces the goods and services tax (GST) at 5%.
"The cost to adjusting consumption behaviour by households will be similar at 4%-5% GST because the proposed rate is still lower than the current sales and service tax (SST) rate. Moreover, the government could raise tax revenue meaningfully with an expected addition of RM8 billion and reduce the chances of having to revise the rate upwards at least for the next five years," it said.
The GST has been widely touted to be announced in Budget 2014, with implementation starting within 18 to 24 months at an initial rate of 4%.
CPPS also asked that the government commit to a five-year timeline when introducing the GST and review the tax with the possibility of raising it by 2020.
"This commitment restricts the government from arbitrarily increasing or removing the GST to promote price stability. Issues of leakages and a lack of transparency in public expenditure should be resolved more enthusiastically in order to build credibility in the eyes of the public," it said.
CPPS said while it broadly agrees with the need to introduce the GST, it recommends that the government look at enhancing measures at fighting price manipulation as well as reinvesting revenue gains from GST.
"The government should encourage establishment of local consumer associations to assist in gathering reports of price fixing since local households are more sensitive to price changes than enforcement agencies at the national level."