GST For The Layperson

ARCHIVES 2010

By admin-s On Mar 16, 2010

Malaysians are not ready to deal with the full brunt of a tax that would ultimately make end users ( consumers ) pay for the entire tax imposed on every purchase amounting to the initial 4% proposed

By TheBlackCactus

On 24^th Of November, Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak had announced the introduction of Goods And Services Tax (also known as Value Added Tax) to replace the existing Sales And Services Tax (of 5%) in the near future. The date scheduled would be roughly in the third quarter of year 2011. It has faced stiff opposition upon tabling in Parliamentary sittings, stating that Malaysians are not ready to deal with the full brunt of a tax that would ultimately make end users (consumers) pay for the entire tax imposed on every purchase amounting to the initial 4% proposed (which will increase as it did in many other countries implementing this policy, see the variation of GST in the countries below).

The question remains whether the government and most importantly, the citizens of Malaysia, are prepared to embrace this new taxation system wholeheartedly when policy makers do not make it a point to educate the layperson the true nature of this policy and its mechanics. Though it was promised that this system would help bring in a total of RM1 billion in the first year of its implementation, many do not realize that there has been much outflight of capital due to

Widespread corruption ( a simple example that would strike a chord among readers would be the PKFZ scandal which cost taxpayers around RM 17 billion – equivalent of 17 years of GST ).

Wastages in expenditure of money in government coffers ( for building crooked bridges linking Singapore )

Malaysia has been stuck with fiscal deficits for more than a decade. The budget deficit is projected to have ballooned to a record high of more than 7% of the country’s gross domestic product (GDP) last year, although the Government is determined to bring that level down to 5.6% of GDP this year, and less than 4% of GDP by 2015. Apparently the Government’s revenues cannot keep pace with the growth of its operating and development expenditures over the 12 years.