Posted: 10:45 am, October 18, 2013 by editor
PRICE Water House Coopers Taxation Services Sdn Bhd (PWC) suggested that the goods and services tax (GST), if announced in the 2014 Budget, should be imposed at six per cent. Senior Executive Director Wan Heng Choon said the six per cent rate was equivalent to the present government sales and services tax.
“If the GST is imposed at six per cent, the government is expected to rake in an annual revenue of around RM32 billion,” he told a briefing on the 2014 Budget here.
According to Bernama, Wan said if the GST was to be imposed at four per cent, it would be ‘revenue neutral’ and there was no point in imposing it.
“No reason to put the country through the GST if all you want to do is to take the same amount of money from the current consumption tax.
“The government should announce the GST now and allow businesses a grace period of 18 months thereafter to get ready for the new tax system.
“We are looking at an effective date for GST implementation somewhere in the second quarter or third quarter of 2015, at the latest,” he added.
Wan also said the government should not wait for the global economic crisis to end before implementing the GST.
“We should have the measure in place to give the government some degree of flexibility in terms of fiscal management,” he said. Wan added that with the implementation of GST, the pressure on the government to maintain the present Fitch’s rating would be significant.
“At least it will not add pressure for further downgrade of the country’s ratings,” he said.
Besides addressing the country’s budget deficit, the GST is also said to be the fairer tax system, as it will help the government collect their dues from those who have yet to declare and file their income tax returns.
“GST will be based on consumption. What the income tax does not capture, the GST will capture it,” Wan added.
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