`GST can generate RM27b in revenue'

Publication: NST

Date of publication: May 18, 2013

Section heading: Business Times

Page number: 001

Byline / Author: By Cheryl Yvonne Achu

KUALA LUMPUR: MALAYSIA can raise an additional RM27 billion a year in revenue if the proposed goods and services tax (GST) is implemented, says Minister in the Prime Minister's Department Datuk Seri Idris Jala.

He said if the GST is implemented at seven per cent like Singapore, it is possible to generate an additional RM20 billion to RM27 billion at maturity level.

What I mean by maturity is that all Malaysians start contributing to the GST, he added.

Idris Jala said the GST will make Malaysia more competitive, noting that more than 140 other economies have implemented the tax, including Canada, Australia, New Zealand and Hong Kong.

He said the implementation can be made as soon as Malaysians are ready to accept the new mechanism.

Idris Jala, who is also Performance Management and Delivery Unit (Pemandu) chief executive officer, said public awareness of the GST mechanism must be raised through education and public engagements.

These are necessary before any decision is made. We want the public to fully understand and are supportive, he said at a forum titled GE13 - What it means for business? yesterday.

According to the Barisan Nasional manifesto, the GST will provide extra funds for the government to spend on the well-being of Malaysians.

Idris Jala said Prime Minister Datuk Seri Najib Razak is committed to reducing corporate and personal income taxes.

This shows that the government wants a balance in every move that it makes, whether economically or politically, he said.

Meanwhile, Idris Jala denied claims that the pre-election promises made by the government will raise the debt-to-GDP (gross domestic product) ratio from the current 53 per cent.

He said the government is committed to maintaining its debt at below the 55 per cent ceiling.

At the World Economic Forum in Davos, when I proposed the Malaysian mechanism of keeping 55 per cent as a ceiling for debt to GDP, many economists and leaders said it was impossible.

This is because Malaysia is very unique for still having its debt below 55 per cent, Idris Jala said.

By comparison, Singapore has a 100 per cent debt-to-GDP ratio while the United Kingdom ratio is at 80 per cent and France at 81 per cent.