Anwar: Pakatan would roll out GST, but only if fiscal position solid

BY SYED JAYMAL ZAHIID

OCTOBER 31, 2013

UPDATED: OCTOBER 31, 2013 02:34 PM

Anwar claimed he has been consistent about the issue. — Picture by Choo Choy May

KUALA LUMPUR, Oct 31 — Pakatan Rakyat (PR) would consider rolling the controversial goods and services tax (GST) should it be elected to power, but only if the country’s fiscal position is solid while Malaysians enjoy higher income, Datuk Seri Anwar Ibrahim said today.

The opposition leader was responding to allegations that the federal opposition bloc is against the consumption tax after they were seen opposing its implementation.

He dismissed the accusation and claimed he has been consistent about the issue — that PR agrees with the GST in principle but opposes Putrajaya’s reasons for replacing the current services and sales tax with a more broadened tax scheme.

“End corruption and monopoly, pluck leakages and elevate the standard of living of the people, then we can consider the GST,” he told reporters in Parliament here.

State-owned Utusan Malaysia ran a report today saying Anwar had backed proposals to roll out the tax system when he was the deputy prime minister in 1993.

In response, Anwar said he had never claimed to be against the GST in principle and admitted that the consumption tax was more efficient and transparent than the present form of taxation by way of the sales and service tax.

“I have been consistent on this issue and I have stated before that in principle, it (GST) is efficient and transparent. But what I am stressing on is that we should first stop leakages and real wage must increase,” he said.

The PKR advisor said the GST idea was mooted by then finance minister Tun Daim Zainuddin.

Anwar said that although he agreed on the positives of the tax system, he was against its implementation in light of Malaysia’s weak economy.

“Daim had said the GST should be in place and I said it is an efficient system but in a situation where the country’s finances is bad... I never did implement it,” he said.

The opposition leader and his allies in Pakatan Rakyat had been campaigning against the GST in the run-up to Election 2013.

While some observers said the implementation must coincide with an increase in disposable income and called for its delay, others have described it as a regressive tax hurtful to the poor and middle-income group.

Three days ago, Anwar said Malaysia may be heading towards an income cliff similar to that of the United States if it rolls out the contentious GST.

In his criticism of Budget 2014, the 66-year-old cited a purported warning by analysts that any economy that has a disproportionate income disparity is destined to doom.

“It is now mainstream discussion, that any economy which has a huge income gap, like that of the US, cannot survive,” he told the Dewan Rakyat in his Budget 2014 debate, following up on previous claims that the consumption tax would reduce the purchasing power of the poor and middle income group.

Prime Minister Datuk Seri Najib Razak in tabling Budget 2014 confirmed previous speculation on the impending implementation of the GST to help widen the government’s tax base and slash its chronic deficit.

The GST, which will replace the current sales and services tax at a rate of 6 per cent in April 2015, comes, however, 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.

In an immediate reaction to the announcement, Anwar said the new tax system would widen Malaysia’s income gap.

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