Published: Sunday October 27, 2013 MYT 12:00:00 AM
Updated: Sunday October 27, 2013 MYT 1:23:24 PM
|Datuk Chua Tee Yong|
KUALA LUMPUR: The reduction in income tax will help the lower-income group to cope when the Goods and Services Tax (GST) takes effect in 2015, said MCA young professionals bureau chief Datuk Chua Tee Yong.
He said those with taxable income of between RM50,000 and RM70,000 would have their tax reduced from 19% to 16%.
The GST, he said, was to widen the revenue collection net, adding that proper records to increase compliance and avoid tax evasion were important to serve its purpose.
This, together with the Government’s move to cut deficit, would help boost the confidence of foreign investors and increase foreign direct investment (FDI) next year, Chua said.
“FDI is important in helping to ensure stability in the economy, attract more investors and provide more jobs for the people,” he said.
The GST will be implemented on April 1, 2015, which is about 17 months from now, at a rate of 6%.
Chua said the exemption on essential goods and services were important to reduce the impact of GST on the lower-income group.
He also proposed that GST be fixed between 4% and 5% initially because feedback was that the rate of 6% was a bit high.
Chua said GST was to replace sales and service tax and it was vital for the Government to provide more information on its impact to empower the consumers to help curb profiteering.
On SMEs, he said most of them were not ready for GST implementation, and he urged the Government to make available to them subsidised training and software to help them in the transition period.
Johor Chinese Chamber of Commerce and Industries deputy president Datuk Loh Liam Hiang said the GST of 6% was “quite high” for a start.
“When Singapore implemented GST, they introduced a 3% tax at first and gradually increased to 7%.”
“Our association had a meeting before this and our members felt that a reasonable percentage to start with is 4%,” he said.
Penang Chinese Chamber of Commerce president Datuk Seri Choot Ewe Seng said he expected some businesses to face teething problems in the early stages as it involves complex tax and accounting procedures.
Johor Indian Business Association president P. Sivakumar suggested that a good portion of the money collected through GST to be channelled to low-income families.
He said that the GST would have an impact on those from the lower-income bracket.