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Friday, November 1, 2013

Cut govt wastage to boost credit ratings instead of pushing GST, says Nurul Izzah

OCTOBER 26, 2013
Lembah Pantai MP Nurul Izzah Anwar said it is only right for the government to
first tackle the many incidences of fiscal mismanagement in its administration
before penalising the rakyat with higher cost of living. — Picture by Choo Choy May

KUALA LUMPUR, Oct 26 — Appeasing credit rating agencies is not a strong reason for the government to impose Goods and Service Tax (GST), as not enough has been done to reduce wastage and plug leakages in the civil service, Lembah Pantai MP Nurul Izzah Anwar said today.

She said it is only right for the government to first tackle the many incidences of fiscal mismanagement in its administration, such as those highlighted by the annual Auditor-General’s (A-G) report, before penalising the rakyat with higher cost of living.

“We’re not exhausting any avenue with regards to wastages, which I think is the first step to be taken by a responsible government,” she said when doorstopped after speaking at the Berhad Investor Day, here.

“I think credit rating agencies are an important determinant for our economy and funding, but at the end of the day it has to be looked at holistically. I think they would also laud the government if it took measures to cut wastages by the ministries,” she added.

Putrajaya came under pressure to address its chronic deficit when ratings firm Fitch downgraded the country’s sovereign debt outlook from “Stable” to “Negative” in July, citing weaker appetite for reforms following Barisan Nasional’s reduced mandate in the 2013 General Election and poor public finances.

Among the key changes demanded by the ratings firm was for a broadening of the country’s tax base such as via the introduction of the GST.

At the same time, Putrajaya came under heavy fire for numerous cases of financial mismanagement and leakages in its various departments and agencies as highlighted by the A-G’s 2012 report, which critics say has never been addressed by the government despite being an annual affair.

Nurul Izzah today argued that the public is not ready to deal with any increase in cost of living that is expected to come with the implementation of GST, in the face of a low pay scale that sees only 14 per cent of working Malaysians paying taxes.

The PKR vice-president noted that Pakatan Rakyat are not against using the GST as an instrument to collect revenue for the government, but repeated their position that neither the government nor the public are ready for it at this juncture.

“GST needs a very efficient collection regime. It’s very complex, and you’re talking about the need to pay up and receive payments.

“Looking at the experiences of Australia and Singapore, the property prices will shoot up as well as inflation. I don’t know the actual extent, but it depends on how good the government is at monitoring errant sellers.

“If you’re not good at looking at errant businesses, how do you expect those in Kedah or Kelantan to know what their rights are? Not everyone has the capability. I hope they will have adequate staff to do this, because it’s going to be disastrous,” she said, referring to the need to beef up collecting agencies such as the Inland Revenue Board.

During his Budget speech yesterday, Najib said the time was right to introduce the tax that was first mooted in 2005 and originally scheduled to be implemented in 2007.

The GST Bill was tabled in Parliament for the first reading in 2009 for implementation in late 2011, but was withdrawn during the second reading in 2010 following fierce public resistance.

The GST is a consumption tax, meaning all Malaysians will be taxed according to their level of spending, regardless of income. This differs from income tax that is only applicable after a certain salary level is exceeded.

Malaysia’s proposed GST rate of 6 per cent is the lowest in the region, whereas most countries implement a 10 per cent value added tax (VAT).

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