KUALA LUMPUR – The suggestion of Finance Minister to reintroduce the Goods and Services Tax (GST) proved that the abolishment of the tax by the Pakatan Harapan (PH) government was a huge mistake to the economy of the country.
It was clear that the revocation of GST in 2018 after it was introduced in 2015 was made for the political mileage and not at the interest of the country.
Regretting the situation, economist, Tan Sri Ramon Navaratnam welcomes the reintroduction of GST and urged for it to be implemented fast to help recover the deficit economy of Malaysia.
He said, the GST is well accepted by majority of the governments in the world as it is the best taxation system. It has a transparent system and a vast acquisition.
“When a taxation system is recognised by most of the countries in the world but not accepted in Malaysia due to politics, it is truly sad for our economy.
“After the GST was withdrawn, clearly, Malaysia lost a huge income and it caused the country to take loans. When a country needs to borrow for its expenditure and operations, it means that the national economy is not stable.
“When the national economy is not stable, it means that Malaysia is facing a huge problem. This is made worse by the Covid-19 pandemic that has no full stop and the repetitious natural disaster and the inflation.
“The rise of inflation caused limitations in the people’s spending capability, thus, we can no longer depend on expenditure to drive the national economy,” he told MalaysiaGazette when asked to comment on Datuk Seri Tengku Zafrul Abdul Aziz’s suggestion to reintroduce the GST to contain taxation leakages.
The Finance Minister confessed that theoretically, although the GST and Sales and Services Tax (SST) are about the same, GST is more practical and efficient as it is difficult to cheat on tax.
Tengku Zafrul also revealed that the government’s income has reduced by RM20 billion after the SST was reintroduced, despite, the prices of goods and the impact of SST is the same as GST.
The national economy, according to Ramon is in a dire situation and it has been translated in Budget 2022.
Not wanting the government to repeat the same mistake, Ramon urged for the implementation of GST to be done as soon as possible.
He said, the government cannot spend too much time to reintroduce GST as it is not good for the grim national economy.
“Delaying it will give a negative impact to the country when it has to borrow and it would affect the credit eligibility, higher cost of loan and total debt to increase which are bad for the financial position of Malaysia.
However, he also advised that the GST system approach cannot be done hastily and shock the businesses and people.
Therefore, he suggested that the government fixes the GST rate at 3% at the initial stage before increasing it prudently, in line with the performance of national economy.
To the B40 and M40 groups that are badly affected by the Movement Control Order (MCO), a lower rate of GST should be given to essential items so that their pockets would not be affected.
“Whatever method of GST implementation, it must ensure that the people who need the government’s assistance do not suffer,” he added.
Ramon, who served the government since Tun Abdul Razak’s era hoped that the current economy situation would become a lesson to the political leaders who rule the country in the future as Malaysia will be facing the 15th General Election (GE15) soon.
“It doesn’t matter what political games these politicians are playing, do not gamble the fate of the people and the country. Do not trouble the people for your political agenda and in the end, the worst hit people are the Malays as they are the majority race of the country.
“The difficulties of the Malays not only happen in the rural areas as in the 50’s but they also happen in the urban areas. We are only talking about the economy and we haven’t even touch about the effects and impacts that the people need to bear due to corruption by those in power.
“Therefore, they need to set aside their political agenda and place the fate of the country and people above all,” he said. -MalaysiaGazette