GST: the cat is out of the bag, finally

Media statement by DAP Political Education Director and MP for Kluang Liew Chin Tong on 18th May 2013 in Kuala Lumpur: 

GST: the cat is out of the bag, finally

With Idris Jala’s latest revelation, the Barisan Nasional Government is finally letting the goods and services tax (GST) cat out of the bag.

Pakatan Rakyat had repeatedly warned that Barisan Nasional’s (BN) return to government in the 13th general election would mean a higher tax burden for the man on the street, especially through the introduction of Goods and Services Tax, seen as Barisan Nasional’s method to balance the budget.

The alternative to the introduction of new taxes is to reduce corruption, wastage and cronyism – the Pakatan Rakyat formula.

Datuk Seri Idris Jala, Minister in Prime Minister’s Department, told a forum yesterday that by setting the rate of GST at 7%, the government will collect an additional RM27 billion from the already financially “squeezed” ordinary Malaysians.

It seems that the implementation of GST is top on Najib’s list after the elections. Indeed, I have been alerted that the appointment of UMNO propagandist Datuk Ahmad Mazlan as Deputy Finance Minister -one of the strangest of Najib’s appointments- is for him to coordinate propaganda for the implementation of GST.

BN has been wanting to implement the GST since 2005 when the then Prime Minister Abdullah Badawi outlined this intention to do so in his speech while presenting the 2006 Federal Government Budget.

Prime Minister Najib Razak has been hiding BN’s intention to introduce the GST for some time, knowing full well that it is an unpopular move and detrimental to the economy.

In his Budget 2013 speech, Najib sent coded signals to the financial sector of the imminent implementation of the GST.

“Para 80. Apart from the transition from bulk subsidies to targeted subsidies, a review of Malaysia’s taxation system will be continued to ensure the taxation system better reflects the household’s financial position. The transition from income based taxation system to a more comprehensive and fair taxation system will eventually benefit the rakyat.

Para 81. The measure will not be implemented hastily but through a thorough study and in an orderly manner. It will not affect the rakyat, particularly the medium and low-income groups as all the basic needs such as food, housing or public transport will always to be protected.

Para 82. Implementation of the new tax tructure is a national imperative to ensure the Government’s finances remain strong for future generation. The Government will not shrink from taking right action although it is challenging.

Para 83. However, the Government will give the sufficient time to all parties to make the necessary adjustment. Public acceptance of this new initiative will be solicited through information programmes, education and extensive consultations.”

In October 2012, Pakatan Rakyat, via a joint statement by Nurul Izzah Anwar, Dr Dzulkifli Ahmed and myself, opposed the implementation of GST on the following grounds:

1. Without addressing systemic corruption and cronyism, the Government has no moral right to impose any new tax whether it is GST or something else;

2. The immediate imperative of the next Government is not to tax the squeezed middle class and the poor more, but to grow their income and disposable income so as to ensure dignified lives for them and also for them to have more cash in hand to contribute as consumers to drive the domestic economy. Taxing them will further erode their disposable income.
3. The Barisan Nasional Government must be reminded that 60 percent of the households live with a monthly income of less than RM3,000, which is why they qualify for Bantuan Rakyat 1Malaysia (BRIM). Imposing GST will tax this group more than what BRIM gives them.

4. The argument that hundreds of items consumed by the poor would be exempted from GST does not hold water because as the implementation of BRIM shows that the financially “squeezed” middle and lower income groups, combines, make up 60 percent of the population. This is too big a group to escape, or be exempted from the GST.

 

Liew Chin Tong

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