FMT:
Ultimately, we must bring back GST, says economist
Yeah Kim Leng says this is part of focusing on consumption tax instead of income tax to establish a ‘growth-based’ tax system.
The goods and services tax was abolished by the Pakatan Harapan government in 2018. (Bernama pic)
PETALING JAYA: The goods and services tax (GST) will ultimately need to be reintroduced to boost Malaysia’s revenue, even if tax administration is made more efficient and tax avoidance reduced, says an economist.
Sunway University professor of economics Yeah Kim Leng said GST was a “more efficient and broad-based” tax system, while the current taxation model was unsustainable.
“This broadening of the tax base, with a stronger focus on consumption over income tax and combined with increased government spending efficiency, will put in place a growth-based taxation system,” said Yeah, who is a member of an advisory body to finance minister Anwar Ibrahim.
Yeah told FMT that the revenue generated through Malaysia’s current taxation system was insufficient to keep up with government spending.
He said increased government expenditure was forecast on health, education and social protection to care for the ageing population.
“Therefore, the current tax system needs urgent recalibration,” Yeah said.
On Thursday, former second finance minister Johari Ghani said the existing taxation model could result in “uncontrollable debt” if mitigation measures were not implemented.
He said neighbouring Asean countries had a higher percentage of tax collected compared to their gross domestic product on average.
In February, economy minister Rafizi Ramli acknowledged that the government may implement the GST “when the time is right”.
The tax was abolished in 2018 by the Pakatan Harapan government three years after it was introduced at a 6% rate.
Bait Al-Amanah research director Benedict Weerasena also proposed reintroducing the GST, albeit with a more targeted and progressive mechanism such as exemptions for all basic necessities and other cash transfers..
“There is also a need to consider reducing income tax rates slightly, to provide some relief from the new tax on consumption,” Weerasena said.
He added that introducing a progressive capital gains tax was crucial to raising tax revenue, pointing out that Malaysia was one of the few remaining countries in the region without such a tax.
PETALING JAYA: The goods and services tax (GST) will ultimately need to be reintroduced to boost Malaysia’s revenue, even if tax administration is made more efficient and tax avoidance reduced, says an economist.
Sunway University professor of economics Yeah Kim Leng said GST was a “more efficient and broad-based” tax system, while the current taxation model was unsustainable.
“This broadening of the tax base, with a stronger focus on consumption over income tax and combined with increased government spending efficiency, will put in place a growth-based taxation system,” said Yeah, who is a member of an advisory body to finance minister Anwar Ibrahim.
Yeah told FMT that the revenue generated through Malaysia’s current taxation system was insufficient to keep up with government spending.
He said increased government expenditure was forecast on health, education and social protection to care for the ageing population.
“Therefore, the current tax system needs urgent recalibration,” Yeah said.
On Thursday, former second finance minister Johari Ghani said the existing taxation model could result in “uncontrollable debt” if mitigation measures were not implemented.
He said neighbouring Asean countries had a higher percentage of tax collected compared to their gross domestic product on average.
In February, economy minister Rafizi Ramli acknowledged that the government may implement the GST “when the time is right”.
The tax was abolished in 2018 by the Pakatan Harapan government three years after it was introduced at a 6% rate.
Bait Al-Amanah research director Benedict Weerasena also proposed reintroducing the GST, albeit with a more targeted and progressive mechanism such as exemptions for all basic necessities and other cash transfers..
“There is also a need to consider reducing income tax rates slightly, to provide some relief from the new tax on consumption,” Weerasena said.
He added that introducing a progressive capital gains tax was crucial to raising tax revenue, pointing out that Malaysia was one of the few remaining countries in the region without such a tax.
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kt comments:
So, Ah Jib Gor got it right in the first place, years back! Yes, then the GST's mechanism and structure were not perfect or even corrupted (rather than corrupt per se) but those mechanisms could have been eventually corrected. But alas, Pakatan Harapan (and pro-Pakatan media) not only campaigned on no GST but campaigned corruptly, eg. by telling blatant lies about GST-ed kerang being out of reach of ordinary citizens like Pakatan's "Makcik Siti Zahara" - read following extract from a previous post titled Very Fake News on Kembung-Kerang?)
Let me see how we can blame the GST?
Noting that the hike in prices not just for fish but for seafood overall, Siti Zahara who is anaemic said she often buys cockles when the dizziness gets the best of her but has also cut down on that of late.
“The doctor advised me to eat cockles or liver (as an iron supplement) because of my anaemic condition.
“Before GST, cockles cost about RM4 per kilo. Now it’s about RM10. So, I buy half a kilo. You can imagine how little that is when cooked.”
Well, I have to say there is a '6' there (a la 6% GST?), but the news has the '6' as a difference between a so-called pre-GST kerang at RM4 to a post-GST kerang at RM10, though again there is no GST on cockles.
How bullshit has been the news.
Even if there is (and to reiterate, there is no GST on kerang), 6% of RM4 only amounts to a round figure of 25 sen. But the point is how fake news have (deliberately?) exaggerated the impact of GST on a non-GST-ed item, to wit, from RM4 to a staggering RM10.
The fake news could only be described as highly mischievous or even evil. Very unscrupulous lah!
I am aware that The Malaysian Insight was previously The Malaysian Insider but really, the Editor should have exercised a bit more prudence and discern what is correct news and what is obviously bullshit.
Related:
(1) Very Fake News on Kembung-Kerang?
(2) Guan Eng's astonishing news on SST-free fresh food
(3) Guan Eng "found lobster" in underwear
Noting that the hike in prices not just for fish but for seafood overall, Siti Zahara who is anaemic said she often buys cockles when the dizziness gets the best of her but has also cut down on that of late.
“The doctor advised me to eat cockles or liver (as an iron supplement) because of my anaemic condition.
“Before GST, cockles cost about RM4 per kilo. Now it’s about RM10. So, I buy half a kilo. You can imagine how little that is when cooked.”
Well, I have to say there is a '6' there (a la 6% GST?), but the news has the '6' as a difference between a so-called pre-GST kerang at RM4 to a post-GST kerang at RM10, though again there is no GST on cockles.
How bullshit has been the news.
Even if there is (and to reiterate, there is no GST on kerang), 6% of RM4 only amounts to a round figure of 25 sen. But the point is how fake news have (deliberately?) exaggerated the impact of GST on a non-GST-ed item, to wit, from RM4 to a staggering RM10.
The fake news could only be described as highly mischievous or even evil. Very unscrupulous lah!
I am aware that The Malaysian Insight was previously The Malaysian Insider but really, the Editor should have exercised a bit more prudence and discern what is correct news and what is obviously bullshit.
T'was the hubris of Guanee that he led the reckless charge against Najib's and eliminated that when Pakatan came into power in 2018 - Mind you, Nurul Izzah was equally guilty in her anti-GST stand, though she was a bit smarter than Guanee by proposing a zero-rated GST which was better than a no-GST policy per se because the government could subsequently ratchet up the zero-rate to say, 'x' % GST when required.
Related:
(1) Very Fake News on Kembung-Kerang?
(2) Guan Eng's astonishing news on SST-free fresh food
(3) Guan Eng "found lobster" in underwear
No Ah Job For did NOT get it right.
ReplyDeleteOnce the form of GST introduced in Malaysia was exposed as corrupted, trust is lost, and it will take many years of persuasion to restore the trust.
Even then, the objective should be Revenue Neutral for the government, at least for the first few years.
Broaden the tax base if you like, but don't go trying to squeeze the economy for more money. That path itself creates more problems and mistrust from the public.