NST Leader: GST? Now?

To be fair, we do not know what the proposed GST would look like, but we do know why it failed. It was introduced when Malaysians were finding it hard to make ends meet.

(NST) – There are two things we can’t escape: death and taxes. Make that death and Goods and Services Tax (GST).

Yes, as a revenue generator for governments, it is hard to offer any cogent arguments against GST. At some point, the government has to introduce GST. But is now the time? We think not. Here is why.

Firstly, GST is not a panacea for all nations as the liberal capitalists in the World Bank and International Monetary Fund keep saying. This isn’t a new argument. Dr Suresh P.P. Narayanan advanced it on Aug 12, 2018 in this newspaper in his op-ed, “Why the GST failed”. Malaysia is a developing nation, not a developed nation, where GST, otherwise called Value-Added Tax, enjoys good reception. What is good for high-income countries isn’t always good for middle-income countries, especially one with a good proportion of people in the low-income bracket.

Or Bottom 40 per cent (B40) as our policymakers call them. Secondly, the government, being in a hurry to plug its deficit, may not have given attention to GST’s downsides. The government may need reminding that one of the major reasons for the people electing a new government after 60 long years was its promise of the abolishment of the GST. If a second coming of a thing needs to succeed, it must not carry the seed of its previous failure.

To be fair, we do not know what the proposed GST would look like, but we do know why it failed. It was introduced when Malaysians were finding it hard to make ends meet. Prices of goods and services were skyrocketing and so were the tariffs on utilities. Low-income Malaysians were spending a good chunk of their income on goods and services, with little to none left for savings.

The story isn’t any different today, though we may have a new culprit to blame — the Ukraine war. Finally, whatever the government says, GST has an impact on the prices of goods. Some economists argue that it is going to be a one-time increase in prices, provided all other things are equal — the ceteris paribus argument of every economics textbook in print today. Let’s be blunt. Outside of economics textbooks, things are never equal. Life, or what economists love to call the “market”, is too complex to analyse factor by arrested factor, like scientists do in controlled experiments in laboratories. There are no equivalent labs for economics, a dismal science at best. Ceteris paribus is unreal. Most of all, it is lazy economics.

This doesn’t mean there isn’t a time for GST. There is, but this is certainly not the time. It will be foolhardy for anyone to argue out an efficient revenue generator like the GST. True, we had a taste for the GST before. But this doesn’t mean we have been made ready already.

Let’s not forget that we had such a bad taste of it that people were ready to vote in a government that promised to abolish it. The government must get the nation ready for GST. And this means getting the government ready as well for the good governance of the billions that would fill the coffers. If GST collection in 2017 is anything to go by, the government would have an extra revenue of RM44 billion.

Leakage not welcomed. 1Malaysia Development Bhd is too recent a national trauma to forget. More so, to forgive.