MM Online - Economists rebuff Dr M’s pledge to repeal GST
GST is already a principal taxation mode in more than 160 countries including Australia, New Zealand, Singapore, UK (Britain), etc because it simplifies taxation on goods to only one single tax instead of multiple layers of taxes.
If correctly monitored, maintained and enforced it is the fairest form of taxation - anyone uses it, he or she pays taxes for it. In Malaysia it's 6%, while in other nations it is higher (10% in OZ, 15% in NZ and 20% in UK).
Don't conflate removal of government subsidy for oil as GST. They are different. GST is just replacing other forms of taxes while government subsidies like pocket money, when removed, will naturally see a rise in prices or some loss to the pocket.
Some portion of the GST collected should be returned to state governments as state revenue, and not kept just by the federal government. That's what is being done in OZ though richer states like New South Wales (NSW) and Victoria (Vic) have complained that their share of GST have gone to states like Western Australia (WA).
I personally and professionally support GST where every consumer pays. As for government subsidies, which is an entirely different issue, we need a separate post to avoid mistaking one for another.
Many in Malaysia might have misunderstood GST as an additional tax on top of the various taxes on goods employed previously. It is NOT.
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Tidak, berita atas bohong saya tidak sebut nak hentikan BR1M sebenarnya kerajaan saya akan jamin BR1M khas untuk pribumi |
KUALA LUMPUR, Jan 28 — Economists have warned against Tun Dr Mahathir Mohamad’s plan to abolish the Goods and Services Tax in the event Pakatan Harapan wins federal power, saying such a move would paint Malaysia as regressing on needed fiscal reforms.
Firdaos Rosli, a fellow of Economics at the Institute of Strategic International Studies (ISIS) Malaysia, went as far as saying it was “preposterous” to entertain the idea of abolishing the GST when the Budget deficit was again widening.
“I don’t think anyone in their right mind would want to do that. Maybe we should ask him (Dr Mahathir) what is he going to do with the economy when you are short by RM40 billion in revenue?” Firdaus told Malay Mail Online.
The consumption tax was among the measures that ratings firms had pressed Malaysia to adopt in order to diversify its revenue stream that had once been heavily dependent on petroleum income. [...]
“Having a robust indirect tax system such as the GST also means that the economy is not going to suffer badly when there is a shortfall in direct tax such as corporate tax and income tax during an economic crisis. Kind of like a buffer,” Firdaos said.
Asian Development Bank’s (ADB) Dr Jayant Menon held similar views against repealing the consumption tax, saying it would be detrimental to the government’s efforts to control its fiscal deficit.
Firdaos Rosli, a fellow of Economics at the Institute of Strategic International Studies (ISIS) Malaysia, went as far as saying it was “preposterous” to entertain the idea of abolishing the GST when the Budget deficit was again widening.
“I don’t think anyone in their right mind would want to do that. Maybe we should ask him (Dr Mahathir) what is he going to do with the economy when you are short by RM40 billion in revenue?” Firdaus told Malay Mail Online.
The consumption tax was among the measures that ratings firms had pressed Malaysia to adopt in order to diversify its revenue stream that had once been heavily dependent on petroleum income. [...]
“Having a robust indirect tax system such as the GST also means that the economy is not going to suffer badly when there is a shortfall in direct tax such as corporate tax and income tax during an economic crisis. Kind of like a buffer,” Firdaos said.
Asian Development Bank’s (ADB) Dr Jayant Menon held similar views against repealing the consumption tax, saying it would be detrimental to the government’s efforts to control its fiscal deficit.
If correctly monitored, maintained and enforced it is the fairest form of taxation - anyone uses it, he or she pays taxes for it. In Malaysia it's 6%, while in other nations it is higher (10% in OZ, 15% in NZ and 20% in UK).
Don't conflate removal of government subsidy for oil as GST. They are different. GST is just replacing other forms of taxes while government subsidies like pocket money, when removed, will naturally see a rise in prices or some loss to the pocket.
Some portion of the GST collected should be returned to state governments as state revenue, and not kept just by the federal government. That's what is being done in OZ though richer states like New South Wales (NSW) and Victoria (Vic) have complained that their share of GST have gone to states like Western Australia (WA).
I personally and professionally support GST where every consumer pays. As for government subsidies, which is an entirely different issue, we need a separate post to avoid mistaking one for another.
Many in Malaysia might have misunderstood GST as an additional tax on top of the various taxes on goods employed previously. It is NOT.
In the Australian example which I presumed Malaysia's would more or less be similar to, the GST is meant to REPLACE (not add on to) those already-existing multi-layered taxes to make simpler the overall tax on goods and services.
In Australia, a 10% GST is imposed on goods like furniture, motorcars, clothing, processed food etc , and 'services' like car repairs, doctor services, char-kuat (massage, wakakaka), haircuts, plumbing or electrical works, etc.
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Now tell me, what are your views on GST? Errrr ... I'll tell you after you let go of me wakakaka |
By the way, it does not replace income tax which is a separate tax altogether, which taxes one's income or revenue.
GST is a consumption tax. You 'consume' certain goods and services, you pay 6% tax in Malaysia, 10% in Australia, 15% in NZ and 20% in UK.
With GST, most things should become cheaper while some will be dearer.
How can it be cheaper, you may ask? Because GST replaces the existing taxes on the goods. Goods that had government taxes levied on it prior to GST should have been removed, thus making the goods either cheaper or at worst, the same price.
For example, if a product was previously taxed at or to a total of 10% then that product would become cheaper (by 4%) because it's now taxed by GST at only 6%. Some products which were previously not taxed at all would of course become dearer, by 6%.
And some goods are NOT subjected to GST, like most fresh food.
I wonder how much was 'white goods' (eg. fridge, washing machine, air-conditioner, microwave oven, western style stoves and ovens, etc) taxed at previously, ie. prior to GST?
One of the hypocritical or bizarre moronic outcome of our toxic politics is some Chinese taking an anti-GST stand, when the GST actually mitigates (solves) one of their age-long complaints, namely, that they (the Chinese) alone have been bearing most of the taxes in Malaysia.
To understand what I mean, please read my July 2013 post Food for thought (1) - GST. Bodoh punya Cina!
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Chinese against GST |
So don't listen to Mahathir. He talks cock on GST as he previously talked cock on BR1M which he now embraces so tightly you would think he personally conceptualised and implemented it.
That's the usual bullshit sprouted by Mahathir.
If his son gets into government as the PM of his Pribumi controlled Malaysia, dear Mukhriz will retain the GST on the advice of daddy Emperor Imperial and who knows, may even raise it from 6%. Additional revenue for Forex entertainment or build another Arabian-night Putrajaya No 2?
I won't be surprised if a new government under Mahathir may even re-categorise BR1M as exclusively for his pribumis and placed it under the NEP program which means the nons won't get it. He is that type of person.
As the experts (economists) say, Malaysia cannot do without the GST. The 'failed state' that you warned about will materialise if Mahathir removes the GST.
But he won't; he only talks cock now, but will shaft you gullible hopefuls later when and if he gets back into power.