BY EILEEN NG
DECEMBER 09, 2013
Prime Minister Datuk Seri Najib Razak (pic) denied that he was referring to the Goods and Services Tax (GST) when implying that the country needed the broad-based consumption tax to avoid bankruptcy.
His denial came two weeks after he was slammed by the Opposition for his statement.
Claiming he was misquoted by the media, Najib in his speech at the Retired Civil Servants Umno Club appreciation luncheon in Putrajaya today said, "I never said without GST, Malaysia will be bankrupt.
"I said if we spend non-stop and don't collect taxes, we'll be like Greece."
On November 25, Najib was reported as saying the government was left with no choice but to replace the current services and sales tax scheme with the GST in a move he said could broaden Putrajaya’s income and avert bankruptcy.
The next day, Najib who is also the Finance Minister was criticised by Pakatan Rakyat MPs who pointed out that Malaysia will still face bankruptcy even after the GST is implemented if corruption and wastage are not addressed first.
PKR's Rafizi Ramli, DAP's Tony Pua and PAS's Khalid Samad cautioned that the GST was not a "miracle drug" to fix the nation's finances.
Najib said while the GST is not a cure for the country’s fiscal deficit, it was an important strategy to prop the economy to make Malaysia an advanced nation.
“When we reduce the fiscal deficit, the economy will be stronger and it will help us achieve our goal of becoming an advanced nation.
“If the economy is not strong, how are we going to pay for everything?” he said.
Najib had been under pressure to rein in spending and boost tax collection to tackle Malaysia's high budget deficit and fast-growing debt pile.
In July, ratings agency Fitch cut its outlook on the country's sovereign debt to negative, citing gloomier prospects for reforms in the wake of Barisan Nasional’s weak election result in May.
Malaysia has one of Asia's highest debt-to-GDP ratios, currently hovering at around 53%. Najib had pledged a balanced budget by 2020 and to keep the debt-to-GDP ratio under 55%.
Malaysia's central bank in August lowered its 2013 economic growth forecast to 4.5%-5%, down from 5%-6%, amid slack external demand for the export-reliant country's goods. - December 9, 2013.