GST is needed as many don't pay income tax -- Najib

The Goods and Services Tax (GST) that will be implemented next year will not burden the rakyat, and instead it is measure sorely needed to increase the country's income, said Prime Minister Datuk Seri Najib Razak.

Najib explained that the implementation of the GST will increase the country's income as it is a progressive tax system that is only imposed on goods and services that one spends on.

He reminded that there were only about one million citizens of the country that are paying taxes and some of them are paying lower than they should.

“We must explain that many people are not paying taxes. As finance minister, I know that many are not paying taxes or are paying less than what they should have.

"This system (adopted by 90 per cent of countries) is more progressive as it depends on how much our expenses are. And in this way, together with steps taken to exclude taxes on essential items used by the people, the introduction of the GST will not burden the people," Najib said at the Prime Minister's Department monthly assembly here on Monday.

Najib also said the government would look into the possibility of exempting more goods and products from the GST without affecting the revenue base expansion.

Najib: GST is like antibiotics

About 20,000 people gathered at Dataran Merdeka last Thursday in a Labour Day protest against the GST.

The government will implement the Goods and Services Tax (GST), effective April 1, 2015 at a fixed rate of six per cent to replace the Sales and Services Tax at 16 per cent.

Meanwhile, Najib likened the GST to antibiotics medication needed to ‘cure’ the country’s economical illnesses and drive the transformation spearheaded by his administration.

"The simple analogy is, when we need antibiotics, we need to take the antibiotics and finish the full course of it. When you finish the course, then your health will recover.

"So, in the journey for the country's transformation, we need to swallow the medication and be confident that the outcome will benefit all of us and see a successful nation," he said.

Najib said if the system was proven effective in 90 per cent of countries, it must have been found to be a progressive tax system that was fair and acceptable to the people.

GST needed for healthcare, human capital

The GST implementation can help stimulate growth and enable the country to provide more infrastructures and basic needs in urban and rural areas, he said, adding that, "If we do not build more modern infrastructures, we will lose our competitive advantage."

The prime minister said more expenses were needed for human capital as it was also a critical factor in terms of competitive strength of any country.

"The tax revenue is also required for healthcare as there is a need to have more hospitals, medical equipment, etc, that are urgent needs of the people," he said.