Government urged to be more transparent on GST

In a forum on the broad based consumption tax entitled “GST: Siapa Untung Siapa Rugi”, panelist FOMCA deputy president Muhammad Sha’ani Abdullah said that it was true that Malaysians would generally be faced with rising costs from the broad based consumption tax.

“It’s true, post-GST, we will be faced with higher taxes. (The government) must be more transparent in terms of explaining the calculations so that people would be more confident in them,” said Muhammad Sha’ani, adding that the government should not be “afraid that the people are getting smarter”.

Muhammad Sha’ani said that the government, by saying that prices of all goods will not go up is being evasive by using a “trick” that lacked transparency.

“That’s a trick that is not transparent. That is only in theory. (But in reality) there would be things that go up and things that go down. We need to be transparent."

However, Muhammad Sha’ani said that if the rakyat understood fully the benefits of GST, and if the government strives to curb corruption and abuse, he was confident they would support it.

'Wrong medicine for the right illness'

“Why was it 6%? Even the economists can’t explain why. The tax should be initially income neutral, but now with 6% there is an increase in income, so that must be explained or there would be more suspicion from the people. That we have already overspent, but now we want to take more money again.”

Meanwhile, PKR strategy director Rafizi Ramli said that the GST was akin to medicine that is, on the whole, a good thing.

“But if you give the wrong medicine for the right illness, you die. Each medicine has its specific use. But for GST, you have to implement it during the right time,” he said, concluding that the GST would burden 90% of the people, but would be beneficial for the elite and cronies.

He stressed that in all countries where the GST was introduced, prices generally have gone up.

"The eventual effect would be an inflation of 6% to 8%, an increase from our current 2.5%. That's more than twice fold increase.

"So the things being excluded from the GST won't really be excluded in the end. If nobody believes me never mind, just wait until the GST is implemented," said Rafizi.

The GST will be implemented at a fixed rate of 6% by April 1, 2015, replacing the existing sales and services tax (SST).