Feeling the GST pinch

By YU JI yuji@thestar.com.my
The Star Sarawak
26 October 2013

KUCHING: The state Malaysian Trades Union Congress (MTUC) has expressed deep concern over the proposed Goods and Services Tax (GST), which is scheduled to begin April 1, 2015.
“A poor family earning RM2,000 is not paying (income) tax now, but soon, they’ll be paying GST.
“In Malaysia today, only about 15% of registered companies are paying corporate taxes — go after them,” Sarawak MTUC’s secretary Andrew Lo told The Star in a phone interview immediately after the unveiling of Budget 2014 by Prime Minister Datuk Seri Najib Tun Razak yesterday.

He said even at the 6% proposed rate, the poor and working classes would feel the pinch.
“Also, MTUC is concerned about enforcement once GST comes into effect. Right now, Customs (Department) cannot prevent beer smuggling. How sure can we be sure smuggling won’t increase after GST?” said Lo, who is also chief executive of Sarawak Bank Employees Union.
Lo also claimed the introduction of GST in advanced countries had not been smooth sailing, highlighting that it could be one of the causes of Japan’s decades-long economic woes.
“Japan implemented GST in 1995. The country has either experienced recession or slow growth since.”

During the tabling in Parliament, Najib spent almost 20 minutes detailing the GST framework, confirming the Sales Tax and Services Tax would be replaced.
He said GST would come in 17 months’ time, and also announced measures like a special one-off RM300 to recipients of BR1M at the time of the new tax introduction.
MTUC is among several high profile non-governmental bodies opposed to GST.
On the Opposition front, Pakatan Rakyat had said in its alternative Budget that GST should not be implemented until real wages had improved.
It described implementing GST now as a “short-cut” and “easy way out” to increase Government revenue.

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