Lower income tax rates likely with GST

Posted on 2 September 2013 - 10:29pm
Elly Fazaniza
newsdesk@thesundaily.com

KUALA LUMPUR (Sept 2, 2013): The implementation of the goods and services tax (GST) will benefit taxpayers as there is a possibility that the government will reduce income tax rates, said Inland Revenue Board (IRB) director-general Tan Sri Mohd Shukor Mahfar today.

He said this is possible as the government needed to balance the GST and income tax to avoid burdening consumers.

He told a press conference after launching the first "tax" office for children at the indoor educational theme park KidZania here to educate them on the importance of paying taxes.

Mohd Shukor said a reduction in incomes tax was a common worldwide trend when implementing the GST.

He was responding to a query from the press on the benefits of the GST should it be implemented.

His response comes amid a recent announcement that it would take the government 14 months to implement the GST if it was announced in the budget in October.

Finance Ministry secretary-general Mohd Irwan Serigar Abdullah had earlier said that the GST would help Malaysia broaden its tax base and address its fiscal deficit which has widened to RM14.9 billion.

The GST Bill was first tabled for first reading in 2009, which empowers the finance minister to decide whether to set a fixed rate for the tax or to have a varied or amendable rate. There had been calls for transparency on the bill's study and to educate the masses on it before it is implemented.

Economists have also then proposed for the GST to be introduced at a lower rate of 4 to 5 percent, as opposed to the proposed 7 percent rate by the finance ministry, in encouraging wider acceptance of it.

On another note, Mohd Shukor announced that the IRB is targeting tax collection of RM130 billion for this year as opposed to RM125 billion last year.