GST? Stop Pretending To Be A Developed Nation

ARCHIVES 2009

By admin-s On Dec 3, 2009

GST will work if and only if the country is one that is of high per capita income. That is because when the average income per head is high, chances are most of its people are already taxpayers. With GST, if I were a taxpayer, an efficient GST system should not cause me to pay significantly more or significantly less taxes than I previously did. If I were a non-taxpayer, GST should not cause me to have to pay any new taxes. But this does not seem to be the case with Malaysia.

By Simon Templar

GST is a serious matter but the general Malaysians are not made aware of it. After all, tax is a complicated matter. And most will choose to ignore it although it affects the dough in our pockets. Taxes are just not our daily comic strip readings.

There is nothing wrong with GST. The government needs taxes to run the country. But the question is, is Malaysia ready for GST?

To debate on this question, we first need to understand what GST really is.

GST is nothing and should not be anything but an ALTERNATIVE TAX COLLECTION METHOD. Right now we have taxes in the forms of corporate tax, personal tax, withholding tax, real property gains tax, service tax etc. Taxpayers go all out to reduce their taxpayers (naturally) via loopholes in the system or through out right illegal means. This is where GST comes in. It ensures a more efficient collection of taxes by the government by having value adding points collect taxes from their customers on behalf of the government. GST should not be a new source of tax revenue for the government that adds on to its coffer.

With GST, the person who sold you the goods or services is now tasked to collect your taxes on behalf of the government and then remit it. The underlying objective is that the collection will be more efficient when the collection ‘agency’ is now no longer paying from his own pockets (there is no heart ache involved). He is merely collecting from his customers; if he fails to collect then he gets penalized – so obviously there is not going to be much incentive for the seller/provider to not want to collect the taxes for the government. If you understand this, then you will see that this is actually a good system. How efficient is the government in utilizing this money is another subject – we are talking about the theoretical effectiveness here.

I mentioned that GST is an alternative tax collection method. It should NOT be an additional tax. But this does not seem to be the case with Malaysia.