MM Online:
GST a ‘lean and mean machine’ and best way to increase revenue, World Bank lead economist tells Malaysia
World Bank lead economist Apurja Sanghi speaks during a press conference at Sasana Kijang in Kuala Lumpur February 3, 2023. — Picture by Ahmad Zamzahuri
Friday, 03 Feb 2023 12:40 PM MYT
KUALA LUMPUR, Feb 3 — Malaysia needs to raise its revenue and the best way to do so is by implementing the Good and Services Tax (GST), the World Bank’s lead economist Apurja Sanghi said today.
He added that it is not by coincidence that 174 countries employ the consumption tax to fill their coffers.
“It is a mean and lean machine that mobilises revenue the best,” he told reporters at the launch of “Expanding Malaysia's Digital Frontier”, the World Bank’s Malaysian economic report for February.
He emphasised that the GST “really” works to brings in revenue.
The Barisan Nasional government introduced the GST in 2015, but it was scrapped three years later by the Pakatan Harapan government with Tun Dr Mahathir Mohamad as prime minister after voters blamed the 6 per cent consumption tax for rising costs.
Apurja said that the government can make the GST more palatable to the public by focusing on nation-building narratives, which was done in Indonesia and India.
“In Indonesia, the narrative was how subsidy removal or subsidy reduction would be used for areas that the Indonesian population really cares about,” he said.
He cautioned that the concept must be communicated effectively.
Besides the success stories of countries who managed to implement the GST, Malaysia can also rely on its past experience, he said.
Apurja also said Malaysia must move away from being a consumer-driven economy towards investment control.
“Consumption used to be about 40 per cent of the GDP in the late ‘90s, it is now 60 per cent or so.
“This kind of over-reliance of consumption is not good,” he said.
He explained that investment is not as large a fraction of the overall economy in Malaysia as it should be, attributing it to a structural issue.
“Investment has pretty much stayed flat for almost ten or twenty odd years,” he said, adding that the solution is to get more investments into the country.
He said that the National Investment Aspirations initiative, which was introduced under then minister of international trade and industry Datuk Seri Azmin Ali, was a good step forward.
Apurja also said that Malaysia had good headline growth numbers last year, partly due to strong private consumption, which was supported in part by Employees Provident Fund withdrawals.
“As you know, only 3 per cent of EPF contributors can afford to retire,” he said.
Friday, 03 Feb 2023 12:40 PM MYT
KUALA LUMPUR, Feb 3 — Malaysia needs to raise its revenue and the best way to do so is by implementing the Good and Services Tax (GST), the World Bank’s lead economist Apurja Sanghi said today.
He added that it is not by coincidence that 174 countries employ the consumption tax to fill their coffers.
“It is a mean and lean machine that mobilises revenue the best,” he told reporters at the launch of “Expanding Malaysia's Digital Frontier”, the World Bank’s Malaysian economic report for February.
He emphasised that the GST “really” works to brings in revenue.
The Barisan Nasional government introduced the GST in 2015, but it was scrapped three years later by the Pakatan Harapan government with Tun Dr Mahathir Mohamad as prime minister after voters blamed the 6 per cent consumption tax for rising costs.
Apurja said that the government can make the GST more palatable to the public by focusing on nation-building narratives, which was done in Indonesia and India.
“In Indonesia, the narrative was how subsidy removal or subsidy reduction would be used for areas that the Indonesian population really cares about,” he said.
He cautioned that the concept must be communicated effectively.
Besides the success stories of countries who managed to implement the GST, Malaysia can also rely on its past experience, he said.
Apurja also said Malaysia must move away from being a consumer-driven economy towards investment control.
“Consumption used to be about 40 per cent of the GDP in the late ‘90s, it is now 60 per cent or so.
“This kind of over-reliance of consumption is not good,” he said.
He explained that investment is not as large a fraction of the overall economy in Malaysia as it should be, attributing it to a structural issue.
“Investment has pretty much stayed flat for almost ten or twenty odd years,” he said, adding that the solution is to get more investments into the country.
He said that the National Investment Aspirations initiative, which was introduced under then minister of international trade and industry Datuk Seri Azmin Ali, was a good step forward.
Apurja also said that Malaysia had good headline growth numbers last year, partly due to strong private consumption, which was supported in part by Employees Provident Fund withdrawals.
“As you know, only 3 per cent of EPF contributors can afford to retire,” he said.
GST-Najib was a self-inflicted disaster for Malaysia
ReplyDeleteWakakakaka…
ReplyDeleteThe catch-it-phrase :
"the GST “really” works to brings in revenue"
Revenues for whom?
The people or the power that brought the financial system down into dire strait?
Don't forget that there r many countries in the current world that has their financial/fiscal operations bootstrapped by GST. Mind u, with expected increments to pack up the increasing monetary holes!
This overhyped consumption tax to fill their coffers is way passed it's initial usefulness. It's a way to postpone current financial/fiscal constraints to the no so distant future!
Sadly mist of the current 'economists' r just pushing this idea around w/o a more detail consideration of the local administrative narratives!
Perhaps, these economists SHOULD move away from their usual norm references of the demoNcratic capitalism & take a few pages from Marx/Lenin/Engel's epithelial works on social economic theory?