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Tuesday, April 8, 2014

A win-win solution

Publication: NST
Date of publication: Apr 8, 2014
Section heading: Main Section
Page number: 012

SOME 12 months from today the Goods and Services Tax (GST) will come into force and the present sales tax and service tax will be made obsolete. April the 1st is popularly known as "Fools Day", but the lower prices on that day next year will not be a practical joke because with the GST, goods and services should become a little cheaper from the day before and for some time hence, given that the GST is set at six per cent initially. It is also a transparent tax; every sales invoice should display the tax imposed on every item sold and service rendered. The customer is then left in no doubt of what he or she has had to pay. It, too, is a progressive tax given the extent of choice available to the consumer, on the one hand, and the scope of goods exempt from GST to accommodate those in the lower income bracket, on the other.

Of course, the range of items affected by the GST is extensive. If it was not, then the claims that the government will have found a substantial and reliable revenue stream would be nonsense. Items excluded would be staples, whether goods or services, which would most affect the economically disadvantaged. This is an essential element without which the tax would be regressive, that is, it penalises the poor most. Instead, the GST is aimed at the avid shopper or the individual who resorts to providers of non-essential services especially. However, Malaysia's reputation as a shoppers' paradise will not be affected. Tourists who are here to shop will be able to apply for a GST refund. Assurances have been given that payment of refunds will be made within two weeks for applications made electronically and double that when done manually.

A further boon to Malaysian taxpayers is the promised reduction in income tax. Consequently, the disposable income of those benefiting from a tax cut would increase, which when resulting in an increase in spending or saving will help the economy expand further and faster. The GST is expected to contribute billions of ringgit to the treasury and will be administered by the Customs Department. And, as is the case with every attempt to cheat the government of its dues, penalties will be ready and aplenty. However, one wonders why there have been protests against the GST's implementation when it has long been proposed? After all consumers are already paying some 15 per cent for the sales and service taxes imposed. The GST merely enhances a revenue collection system that is sensitive to the dictates of social justice and is no less effective as a revenue generator.

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