Analyst: With GST, people will feel Putrajaya’s hands in their pocket

BY BOO SU-LYN

OCTOBER 25, 2013

Customers leave with their groceries after shopping at a supermarket
in Kuala Lumpur August 28, 2013. — Reuters pic

KUALA LUMPUR, Oct 25 — The Goods and Services Tax (GST) announced in Budget 2014 today will make Malaysians realise that “the government takes money from our pockets to spend”, a political analyst said today.

Wan Saiful Wan Jan, chief executive of the Institute for Democracy and Economic Affairs (IDEAS), also said that the consumption tax will force Putrajaya to be more accountable and transparent over its expenditure.

“So I expect that with GST, the people will demand for more accountability when the government spends,” Wan Saiful said in a statement today.

“Malaysians have for so long felt that the government spends the ‘government’s money’. They don’t realise that the government spends the people’s money. With GST, everyone will realise that the government takes money from our pockets to spend,” added the political analyst.

Malaysia will finally implement the long-delayed GST at 6 per cent beginning April 2015, Prime Minister Datuk Seri Najib Razak announced today as Putrajaya seeks to tackle its chronic budget deficit.

The replacement to the current Sales and Services Tax comes amid public concerns that it will increase the cost of living through a hike in the inflation rate, especially after a fuel subsidy cut in September.

To offset the new tax, Najib also announced that personal income tax will be reduced by 1 to 3 percentage points, depending on the income bracket.

“Generally, families with a monthly income of RM4,000 will no longer pay tax. Other existing taxpayers will also enjoy tax savings,” he said.

A one-off payment of RM300 under the 1 Malaysia People’s Aid (BR1M) will also be made following the implementation scheduled for April 1, 2015.

Najib said that the GST will not be imposed on essential food items like rice, sugar, salt, and cooking oil; piped water supply; government services like the issuance of passports, licenses, healthcare services and school education; or transportation services like buses, trains, LRTs, ferries, boats, and highway tolls.

Sales, purchases and rentals of residential properties, as well as selected financial services, are also exempted from the GST.

The prime minister pointed out that Malaysia’s GST rate of 6 per cent is among the lowest in Asean countries, noting that the GST is fixed at 7 per cent in Singapore and Thailand.

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