GST benefits far outweigh costs, say analyst

Zaidi Isham Ismail Published: 2013/08/30

KUALA LUMPUR: The goods and services tax (GST) should have been implemented earlier to reposition Malaysia back on track towards a stable economic growth.

PricewaterhouseCoopers Taxation Services Sdn Bhd senior executive director Wan Heng Choon said implementing the GST early will help to reduce uncertainties. 

"Firms are unable to make business decisions and start projects due to uncertainties in the implementation of the GST. 

There has been more than sufficient time for the implementation of GST," Wan told Business Times in a phone interview yesterday. "Now is the time to do it." 

Wan forecast the GST will be implemented by as early as the first quarter of 2015. 

He was commenting on reports that the government is mulling over the implementation of the GST. 

Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah said apart from the GST, the government is also looking to review the real property gain tax, subsidies and projects with lower import content. 

The GST is a broad-based consumption tax initially scheduled for implementation in the third quarter of 2011 but was postponed following calls for consumers to be educated first on how it works. 

RAM Holdings group chief executive Dr Yeah Kim Leng said the implementation of the GST is a long-awaited move and the government should strike now while the iron is hot to strengthen its fiscal public finance position. 

"Malaysia must join those 170 other countries that have already implemented this added value tax regime. It is part of the government's fiscal reform to rebalance overall tax efficiency because currently, only 1.2 million Malaysians are registered tax payers." 

He said the net benefits far outweigh the costs and that the tax burden should fall equally on all levels of the income group. 

Meanwhile, Wan dismissed the perception that GST will affect low-income earners as their needs are being addressed by various schemes, such as BR1M2 (1Malaysia People's Aid), whose objective is to help those who require help the most. 

Yeah concurred, saying the government has in place compensationary measures to replace the burden of the GST, such as cash handouts for the lower-income group and personal tax reduction for the middle-income class. 

"The compensationary measures will offset the price impact brought about by the GST. However, the government, especially the Finance Ministry, must launch a full-scale educational programme on the GST, said Yeah. 

He added that with the removal of the five per cent sales tax and six per cent services tax, prices can even be lowered because with the elimination of taxes, manufacturers will be able to lower the cost of production and get rebates, which in turn translates into savings that will then be passed on to consumers. 

Yeah said contrary to popular belief, the rich will not be better off as the more they consume, the more they will have to pay and the lower-income group will be protected as essential goods such as sugar, flour and rice will not be taxed. 

He said Malaysia can learn from the experiences of those countries that have adopted the GST to avoid similar pitfalls. 

He said the signs are getting clearer with strong indication that there will be some announcements on GST in the 2014 Budget on October 25 and he expects the GST to be implemented by as early as January 2015.

Read more: GST benefits far outweigh costs, say analyst http://www.btimes.com.my/Current_News/BTIMES/articles/20130830003038/Article/index_html#ixzz2dPUibJJL