GST is still facing great resistance

Opinion 2013-10-08 14:34

Translated by SOONG PHUI JEE

Sin Chew Daily

Prime Minister Datuk Seri Najib Razak is going to table the Budget 2014 on 25 October and it now remains unknown whether it will include the announcement of implementing the Goods and Services Tax (GST) as speculated. However, alternative coalition leader Datuk Seri Anwar Ibrahim has made it clear that Pakatan Rakyat leaders will not only strongly oppose to the implementation of GST in Parliament but nationwide protests will also be organised.

The government has first proposed the concept of GST in 2005 and the Goods and Services Tax Bill had been tabled for first reading in Dewan Rakyat in December 2009. However, the Bill scheduled to be tabled for second reading in March 2010 was shelved until today due to fierce opposition from various parties.

The government has made many efforts to explain the benefits and necessity to implement the GST over the past three years, and promised that some basic necessities will be exempted from the GST, to offset its impact. However, the lower-middle-class people are generally still unclear about the GST and worried that it would lead to disastrous inflation.

Some business operators are also worried that the implementation of GST might lead to the decline of consumption, worsening the situation of the currently sluggish consumer market and bring adverse impact to the country's overall economy.

Meanwhile, the Opposition believes that if the government can solve the problem of losing a huge amount of public funds to the pockets of its cliques and eradicate government departments' corrupt practices exposed in the Auditor-General's Report, the Treasury will then have more funds than enough and there will be no necessity to implement the GST.

Despite the voices against the GST are so strong, many economists believe that in the long run, the GST could actually bring the country and the people more good than harm and the earlier the implementation, the better. They pointed out that the concept of income tax is "earn more pay more taxes" while the GST is "spend more pay more taxes". Under the GST's system, not personal income, but consumption will affect the amount of taxes. Therefore, after the implementation of the GST, the rich who spend more will pay more GST and thus, the GST is a fairer and better tax system.

Once the GST is implemented, the people are most concerned about whether the government will reduce personal income tax and corporate tax. How much will be the rate for the GST? Would it be 4%, higher, or lower?

Undeniably, the voices against the GST is still strong today, as the people have not yet got a clear picture about the system, as well as how the government is going to spend the additional tax revenue that could reach a dozen billion of ringgit.

In short, transparency has been the people's greatest concern. It is possible to eliminate the people's unease and misgivings about the GST only if a more transparent mechanism is established.