| October 31, 2013
"If GST is implemented effectively like how it is done in Singapore, there will be a redistribution of income and wealth in its kind", says Chua Tee Yong
KUALA LUMPUR: The Opposition will always resort to saying the timing is not right for a new government policy such as the goods and services tax (GST), unless they become the government, said Labis MP Chua Tee Yong.
Responding to Opposition leader Anwar Ibrahim’s statement last week saying that it is untimely to implement the GST on April 2015 due to lack of real wage increase since 1997, Chua said that this is the usual trick of Pakatan Rakyat (PR).
“To them (Pakatan) the timing is always not right until they become the government.
“Look at Penang, before they become the government, they say the timing is not right to build the second bridge. It is a waste of funds.
“But after they take over, they want to expedite the construction of second bridge. Now they even want to build the third bridge,” he told FMT in an exclusive interview today.
Chua said the implementation of GST has its merit because there are a lot of leakages in the current tax regime.
He said it can be proven through the government’s increased revenues in income tax from RM90 billion in 2008 to a projected RM127 billion this year despite the reduction in corporate tax and personal income tax.
“The reason for that is they have improved the compliance to pay tax.
“Even for Pakatan, when they present(ed) their alternative budget, they admitted there are a lot of people who don’t pay tax. (Minister in the Prime Minister Department) Idris Jala also said 80% of the outflow cannot be reconciled,” he said.
The former deputy agriculture minister said GST would serve as a redistribution of income and wealth in its kind, if the country is be able to implement an effective GST regime similar to Singapore’s.
“A recent survey done in Singapore showed that 75% of the GST collected comes from the top 25% earners, which means the high-income group and expatriates.
“So it depends on how government rolls it out. But without the details now, I cannot say whether it is totally wrong or right. So far it is only a budget speech, the (GST) act has not been tabled in Parliament,” he said.
Chua urged the government to publish a list of items currently being charged the 10% sales tax and 6% services tax to avoid businesses from double-charging consumers once GST is in place.
Sales and services tax will be abolished once GST takes effect.
He also said that a survey should be done on the impact of GST on people from the lower, middle and upper income groups, whilst a hotline should be setup to attend to their enquiries in the run-up to GST.
For businesses, he said the government’s grant and subsidy to assist the community with software update and training should not be set in quantum as announced in the Budget 2014.
“If it is not enough, next year budget they must add (it) in. It is important to assist SMEs to comply with GST. They also should be given a grace period once GST is in place,” he said.