Published: Monday October 28, 2013 MYT 12:00:00 AM
Updated: Monday October 28, 2013 MYT 10:53:23 AM
PETALING JAYA: The 6% Goods and Services Tax (GST) rate to be implemented in 2015 is a good decision because it will provide extra revenue for the Government, said the Chartered Tax Institute of Malaysia.
Its president S.M. Thanneermalai said there was no point settling on a lower rate because there would be practically no difference in the revenue collected.
“Why introduce a new tax system if there is no extra revenue to be gained?” he said, pointing out that the Government needed the additional revenue to meet its budget deficit.
Financial analysts and international bankers have been talking about the need for Malaysia to have a more robust tax collection to get its finances in order, he said.
“If our finances are in order, then our currency will not be affected in the long run. Under these circumstances, my opinion is that the 6% rate is a good idea and we should begin planning ahead of its implementation,” said Thanneermalai.
He said that although the Government would collect about RM8bil extra in revenue, some RM4bil to RM5bil of that would be given back to the people.
This, he said, was due to the raft of measures in Budget 2014 designed to help society, especially the low– and middle-income groups adjust to the GST.
“Personally, I think all monthly electricity units used by households should be zero-rated under the GST, not just the first 200 units,” he said.
He said that 200 units was insufficient, especially in the urban areas where air-conditioners were commonplace.
However, the Federation of Malaysian Manufacturers (FMM) said the GST rate would be a major burden on manufacturers, especially the small and medium enterprises (SMEs) which constitute 98.5% of businesses.
“The 6% GST rate is higher than anticipated,” said the FMM in a press statement, noting that other countries in the region had increased their GST rates incrementally over a period of time.