GST a ploy to hide economic ills, says Pakatan

(The Malaysian Insider) – Putrajaya’s desire to implement the goods and services tax (GST) in the future is an easy way get more money and divert attention away from economic problems such as inefficiency and corruption, says Pakatan Rakyat (PR)

While the Barisan Nasional (BN) government is not expected to introduce the GST till after the general election, Minister in Prime Minister’s Department Datuk Seri Idris Jala was quoted in the Wall Street Journal yesterday that he expects the proposed GST to help boost state revenue and help put an end to the federal budget deficit by 2020.

PKR’s strategy chief Rafizi Ramli said Malaysia did not meet the conditions for the introduction of GST and it was being used as a “shortcut” to reduce the budget deficit instead of addressing fundamental flaws in the country’s economy.

“GST is a red herring to cover those economic weaknesses,” Rafizi told The Malaysian Insider.

He noted that if the ruling coalition instead stamped out rent-seeking activities, corruption and cronyism it would boost economic growth which would in turn boost government income.

Rafizi also noted that in other countries, GST was used as a substitute tax, meaning that income tax would be cut if the consumption tax was implemented which amounts to the net effect of the new tax being neutral.

He pointed out however that if it was implemented in Malaysia, the net effect would be an additional tax burden on large numbers of Malaysians whose earnings currently fall below the taxable income threshold.

Rafizi said that based on PKR’s means testing, which involved evaluating the size of the economy, government revenue and people’s income levels, Malaysia was a poor candidate for GST at the moment.

“There are pre-requisites for GST, you can’t implement as you wish,” he said.

DAP publicity secretary Tony Pua said that while GST was supposed to broaden the tax base as only an estimated 10 per cent of Malaysians currently pay income tax, the question that needed to be asked was why were so many Malaysians earning so little as to fall below the taxable threshold.

He said that even if 10 per cent out of the people who are not currently paying tax are tax dodgers, GST still would not make sense as it meant that many more low-income Malaysians would be burdened.

“If they can’t earn enough, why should they be burdened with additional taxes,” he said. “People’s incomes have not increased significantly.”

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