GST provides better clarity than sales tax, says expert - Bernama

OCTOBER 11, 2013

The introduction of the goods and services tax (GST) will provide better clarity to the buyers instead of the sales tax, said Taxand Malaysia chairman, Dr Veerinderjeet Singh.

Veerinderjeet said the sales tax, imposed at the manufacturer's level, was very opaque and most of the people didn't realise it was imposed on them even though most of the goods carried the tax.

"It has always been there, hidden from us," he said at a seminar, entitled GST: The Good, The Bad and The Ugly, organised by the Malaysian Economic Association, in Kuala Lumpur today.

He said among other weaknesses of sales tax and services tax were that there were too many exemptions and revenue collection was low.

GST, however, has been implemented in 160 countries and worked well in many jurisdictions, he said.

Veerinderjeet said the new tax structure would also provide a stable long-term source of tax revenue for the country.

Veerinderjeet said the GST, once implemented at a revenue-neutral rate of 4%, was estimated to rake in a revenue of RM18 billion, which was quite similar to the current revenue of RM16 billion to RM17 billion from sales and services taxes at an average rate of 7%.

GST, a broad-based consumption tax, or value-added tax, was first tabled at the Dewan Rakyat in December 16, 2009 to replace the existing sales and service taxes but was withdrawn last year for amendment.

The multi-staged transaction-based tax structure, imposed on the supply of goods and services, was mooted to help the government curb tax evasion. - Bernama, October 11, 2013.