'GST implementation not necessary for now'

FARAH SHAZWANI ALI
FARAH SHAZWANI ALI
17 Aug 2023 10:53am
The Goods and Services Tax (GST) does not need to be implemented at this time if the government's current budget can still manage the country's finances. - FILE PIX
The Goods and Services Tax (GST) does not need to be implemented at this time if the government's current budget can still manage the country's finances. - FILE PIX
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SHAH ALAM - The Goods and Services Tax (GST) does not need to be implemented at this time if the government's current budget can still manage the country's finances.

Analyst from Universiti Kuala Lumpur, Associate Professor Dr Aimi Zulhazmi Abdul Rashid, stated that the government needs to consider the rising cost of living and its impact on the people and rationalize the country's tax structure if it intends to implement GST.

"However, its implementation should be done if the government is making changes to the desired economic structure, such as with the Madani Economy.

"Nevertheless, it should be implemented gradually without causing panic among the people. It's also better to gain understanding and buy-in beforehand with the stakeholders in order to have their ideal support," he said.

He made these remarks when asked to comment on the statement made by the President of the Malay Chamber of Commerce Malaysia, Norsyahrin Hamidon, who urged the government to reconsider the reintroduction of GST which was abolished in 2018.

He mentioned that GST is the most efficient tax system in the world, with more than 172 out of 193 countries implementing it.

Aimi Zulhazmi added that if GST were to be implemented, two things need to be considered: the rate should be manageable such as eight or nine per cent.

He stressed that it's preferably sufficient about three per cent and already can significantly contribute to boosting the government's finances.

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"Secondly, when implementing GST, the government needs to be responsive and implement a clear modus operandi. If people want to receive rebates, the process needs to be swift or it would disrupt cash flow.

"Furthermore, income and corporate taxes should be lowered to avoid burdening the people; only then will GST receive public acceptance," he said.

Meanwhile, Universiti Putra Malaysia School of Business and Economics Senior Lecturer Dr Muhammad Daaniyall Abd Rahman said that from an economic perspective, GST is a good and reasonable measure to implement.

Nevertheless, he noted that the implementation period depends on the government's wisdom.

"As economists, we consider GST a fair taxation mechanism for all parties, and we implemented it in 2014 before it was abolished in 2018.

"The GST collection in 2017 alone amounted to over RM40 billion and was reinvested for the people through various projects, including infrastructure upgrades and improvements to the public transportation system to develop the country," he said.

He highlighted that this matter needs to be carefully studied if the government intends to reintroduce it within the next two to three years.