Profiteering likely under BN-style GST, warns PAS

BY SYED JAYMAL ZAHIIDOCTOBER 26, 2013

Tuan Man pointed out that due to widespread corruption, many businesses would
also be able to evade punishment despite violating the law by profiteering from the GST.
— Picture by Choo Choy May

KUALA LUMPUR, Oct 26 — The implementation of the Goods and Services Tax (GST) by a government purportedly known for its administrative weaknesses would only subject taxpayers to profiteering, a PAS leader said today in his criticism of the contentious consumption tax system.

Party information chief Datuk Tuan Ibrahim Tuan Man accused the ruling Barisan Nasional (BN) of being notorious for its inefficiency and alleged corrupt practices, and said to roll out such a complex tax system in a short time would render consumers open to cheating.

“The most important aspect of the GST is the enforcement, an aspect BN is known to be weak for.

“PAS is visualising a problem where a shop that is not qualified to impose the GST will do so to its customers for extra income. The remaining extra money will then not be reported to the government due to weak enforcement and monitoring.

“At the end, the people who pay the GST is not contributing to the government’s income but to enrich themselves,” he said in a statement here.

Tuan Ibrahim pointed out that due to widespread corruption, many businesses would also be able to evade punishment despite violating the law by profiteering from the GST.

“Due to rampant graft, PAS also envisions a scenario where many companies would walk free from penalties despite using the GST to increase prices,” he said.

“Therefore, with this weak enforcement problem and widespread corruption, the climate in Malaysia is not suitable for GST. Especially when BN is still in power”.

Tuan Ibrahim and his allies in Pakatan Rakyat have long opposed the GST. While some said the implementation must coincide with increased in disposable income and call for its delay, some have described it as a regressive tax hurtful to the poor and middle income group.

When tabling Budget 2014 yesterday, Prime Minister Datuk Seri Najib Razak 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 come 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.

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

Najib said the 26 per cent maximum income tax rate will be reduced to between 24 and 25 per cent, effective 2015.

He also said that a one-off payment of RM300 under the 1 Malaysia People’s Aid (BR1M) cash aid programme will be made following the implementation of the GST scheduled for April 1, 2015.

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