Support for GST came with ‘pre-conditions’, says Anwar
(Malay Mail Online) – Datuk Seri Anwar Ibrahim today denied he supported the imposition of the goods and services tax (GST) when he was finance minister in 1992, claiming that the government failed to live up to his exacting standards of implementation at the time.
The opposition leader said it was “disingenuous and misleading” of Prime Minister Datuk Seri Najib Razak to claim that the former supported the broad-based consumption tax, which will take effect on April 1, 2015.
“Even then in Parliament I had made it explicitly clear that the GST must be carried out in a ‘transparent and efficient’ manner and by that I had stated that certain prerequisites must be met before implementation,” Anwar said in a statement.
“These included proper governance, transparency, no leakages and wastage, and safeguards against corrupt practices. I had also emphasised that the GST should start at a low level.
“These pre-conditions not being fulfilled, that was why the GST was never implemented during my watch as Finance Minister,” the former deputy prime minister said.
Yesterday, Najib said Anwar was the first finance minister to moot the GST in 1992, with the intention of implementing the tax regime the following year.
“Anwar, however, made a U-turn later on the GST. If it was not a good idea, then why did he announce it in the first place?” Najib was quoted as saying at a GST briefing by English daily The Star.
Najib repeated Putrajaya’s position that GST is needed to make sure the country has enough funds to sustain development.
The government is planning to implement GST starting at six per cent next year, to replace the existing sales and services tax (SST) which currently stands at 10 per cent.
However, unlike SST, which is imposed on a limited scope of consumption, the GST will cover a broad base of goods and services, many of which were previously not affected by the SST.
The government has admitted that the implementation of GST would lead to a nominal increase in prices, but noted that consumers are only required to pay tax on goods and services used.
Najib added yesterday that the impact of GST implementation will be offset by a lower income tax rate and a RM300 increase to the Bantuan Rakyat 1Malaysia (BR1M) financial aid to low income households.
This year, the government gave a one-off RM650 payout to households earning RM3,000 and below, on top of a RM300 handout to single individuals earning RM2,000 or less. Putrajaya also doled out RM450 in financial aid to each household earning between RM3,000 and RM4,000 monthly.
The federal opposition and civil society groups have opposed the government’s GST plans, claiming that it will place undue stress on a population that is already bogged down with high household debt and little or no savings.
Pakatan Rakyat has argued that it is incumbent on the government to improve on its own fiscal management and to plug leakages in its administration before passing the burden of raising funds on the public.
