Exemption cannot be just GST – Raymond

by Amy Dangin. Posted on May 22, 2013, Wednesday

KOTA KINABALU: Exempting any tax regime must take into consideration the overall tax structure that the whole nation runs on to avoid imbalance in the taxation scheme, said Deputy Chief Minister Datuk Raymond Tan Shu Kiah.

Commenting on the proposal to exempt Sabah and Sarawak from the Goods and Services Tax (GST) made by STAR Sabah chief Datuk Dr Jeffrey Kitingan, Tan pointed out that taxation in the country was a national policy under the purview of the national government, and a question of exemption therefore could not simply be implemented.

“If you ask me, you cannot just single out a single tax regime. You have to understand the overall tax structure in Malaysia and emphasize on balance.

“It cannot be just GST alone because there are other tax regimes, such as income tax, corporate tax, excise duty, and what not. People are not happy paying any tax, but this country is run on a structure and therefore has to look at the overall system.

“So if you’re proposing to exempt Sabah out of GST, my next question would be, what implication would it have on the rest of the structure?” said Tan.

In making such a proposal, a thorough study needed to be done on the benefits and disadvantages on the taxation system of the country, and hence, on the people, said Tan,

“Whatever is suggested, present to the people what would be the benefit of such suggestion, what impact it has on the nation, and what changes will it make to the overall tax structure in the nation, then the people would understand better.

“It cannot simply be done according to a personal preference,” said Tan.

He said although the state government had yet to deliberate on the matter, it was being constantly monitored before any decision was to be made.

According to Jeffrey, the request to exempt Sabah and Sarawak from GST was more than justified due to being the “poorest states in Malaysia despite being rich in natural resources.”

He said in 2012, RM17.88 billion in oil revenue was collected from the two states, adding that Sabah lost another RM24 billion in federal taxes and revenues collected from the state.

He also pointed out that the Cabotage policy was increasing the living costs of Sabahans and was stifling Sabah’s economy and making Sabah an uncompetitive investment destination.

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