GST is the future of Malaysia and right thing to do, says Idris Jala

Sathesh Raj
April 18, 2015 10:09 MYT

IDRIS: Introducing GST was a difficult decision to make but it is the right thing to do for Malaysia in the long run. - File Photo

The introduction of the Goods and Services Tax (GST) on April 1 is the right move for Malaysia, for now, said Performance Management and Delivery Unit (Pemandu) chief executive officer, Datuk Seri Idris Jala.

Idris, who is also Minister in the Prime Minister Office added GST implementation is crucial for the country's economic growth.

"I know it's difficult to do but introducing GST is the right thing to do for the future of Malaysia.

GST: The right thing to do

Idris said, at present there are 29 million Malaysians and prior to GST only 1.7 million people were taxed.

The income tax, said Idris would not be sustainable for the country in the long run.

GST: Need to help the poor

Among all the ASEAN nations, Malaysia has the lowest GST rate at six per cent. The majority of ASEAN countries imposes a 10 per cent GST.

Idris also said that Singapore imposes a seven per cent GST but no exemptions or zero-rated goods are imposed.

"Malaysia is fortunate," he added.

In other parts of the world, the United Kingdom has a 20 per cent GST rate while a low-income country such as Tanzania imposes an 18 per cent rate.

In the long run, Malaysia will become an aging nation where people live longer, so many would retire.

Idris said when a large aging population is reached, the public health service will be hit with colossal impact and GST would ensure the impacts are mitigated.

GST: Making an unpopular decision

Also, by the year 2020, he said the number of people living in Kuala Lumpur and the Klang Valley would escalate from six million to 10 million.

"This is because people are converging into the city and if we don't build the necessary infrastructure to accommodate everyone, the city will be gridlocked.

"And how are we to afford building all these things for the rakyat? We cannot do it without raising the government's revenue," said Idris.

He said even though the Economic Transformation Program (ETP) is in place, the tax system needs to be broadened to ensure steady economic growth.

Idris said he believed that the day will come when the GST rate in Malaysia would be increased to match the ASEAN level, by which time the rakyat's income tax and corporate taxes could be reduced.

GST: Gridlock, taxation and sustainability

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