'It's a more transparent taxation system'

Publication: NST

Date of publication: Apr 4, 2014

Section heading: Main Section

Page number: 008

Byline / Author: By Zarina Zakariah; Hana Naz Harun

THE Goods and Services Tax (GST) is needed to improve the economy and livelihood of the people, but businesses must be monitored closely to curb profiteering when it is implemented next year.

Barisan Nasional members of Parliament, in supporting the GST bill, said the government had studied all aspects before deciding to implement the tax.

Datuk Johari Abdul Ghani (BN-Titiwangsa), during the debate, said the existing sales and services tax (SST) had a lot of weaknesses and was not economy-friendly.

"Under the SST, consumers may be double-taxed, as a retailer may charge an additional six per cent service tax on top of the five or 10 per cent sales tax.

"It also makes our products not competitive and not market-friendly," he said during the debate.

Johari also reminded the House that many essential items would not be taxed and that the government would be providing a one-off aid of RM300 as a measure to ease the transition period.

The government, however, must ensure that retailers and wholesalers do not take the opportunity to increase prices, he added.

"This is where the Domestic Trade, Cooperatives and Consumerism Ministry must play its role and ensure that businesses do not simply increase their prices," he said, suggesting that shops should display a shoppers' guide for consumers to compare prices before and after GST.

Meanwhile, Datuk Chua Tee Yong (BN- Labis) said the GST was a more transparent taxation system and implementing it would solve the cascading tax effect.

He also said that the GST was a consumption tax that would depend on the consumers' habits.

"If implemented correctly, it is an effective way for the government to find a more stable and business-friendly manner to increase revenue," he said, adding that it would reduce incidents of tax avoidance, with the presence of improved documentation in business transactions.

Datuk Wira Ahmad Hamzah (BN-Jasin) said that there were parties who claimed the government was in a rush to implement the new taxation system.

"This idea was not thought of yesterday. It has been proposed since 1988 and was tabled in the 1989 Budget. In the Asean region, only Malaysia and Myanmar have yet to implement GST."

Tony Pua (DAP-Petaling Jaya Utara), said that it was not time yet to implement the GST, as the gap between the rich and the poor was too wide.

The GST was announced by Prime Minister Datuk Seri Najib Razak during the tabling of the 2014 Budget and will be implemented beginning April 1 next year at a rate of six per cent. When implemented, it will replace the sales tax and services tax introduced in 1972 and 1975, respectively.