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GST – My Take.

December 2, 2009

I was asked what my thoughts are, of the coming GST of the govt. These are my immediate response:

i. GST is by nature regressive, ie it is across the board and of course will hurt more those in the lower-income group.

ii. Depending on what items would be imposed of the new tax of goods and services, the GST would be perceived as very unfair, if it involves all basic necessities of food items and essential services. A selective imposition of a more luxurious items, of tertiary need may be fairer to our poorer section of our rakyat.

iii. The lowly paid income groups both rural and urban, are now penalised by the GST and they are paying the same amount with the richer section of society.

iv. 4% of GST is exorbitant and the anticipitated revenue of RM 1 billion is a very conservative estimate. The current Sales and Services Tax earned the govt more than RM11 billions. The GST will certainly be more than that.  Otherwise there’s no rationale of converting to the GST.

v. The govt must be reminded that stopping leakages in delivery system and stamping corruption/abuse will earn the govt an estimate of RM 28 billions a year as testified by the Auditor’s Report. Avoiding flip-flop esp in mega-projects will save the tax-payers money to the tune of tens of billions RM

vi. GST perhaps may be more appropriate when we are able to increase income of the lower iincome groups and move our economy to a higher income economy.

vii. Inflationary pressure will surely hurt the poorer section of our rakyat though arguably may not be for long.

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