Goods and services tax or GST has become a subject of debate for a long time. Irrespective of political systems either democracy or single party state, irrespective of planned or free market economy, countries around the world have been adopting the GST as part of a more efficient tax collection system. In some countries GST is called Value Added Tax (VAT). It is called VAT because at each level of production, VAT or GST will be charged and not just to the end consumer. And importantly businesses and enterprises who are charging GST and paying GST at the output level will be able to deduct the GST paid at the Input level. Meaning businesses do not pay the 6% GST gross but rather the net of the output minus the input. It is not true to say that GST is cumbersome as businesses have been paying and collecting Sales and Services Tax (SST) prior to the introduction of the GST in Malaysia.
As we know in Malaysia, there are many people who do not pay income taxes. Those who are earning below certain threshold are exempted from income taxes and only a small percentage of Malaysian actually pay this class of tax. Reliant on income tax alone will add to the stress of the Malaysia's financial management. What more with the depleting revenue from oil and gas sector and the volatility in the commodity prices.
The Government needs to diversify both the mode of raising income and the economy as a whole. The Government needs to have an efficient tax system to sustain the economy and spending level to support the development of the country whilst diversifying the economy. Malaysia needs to move from natural resources-based economy to the efficient-seeking economy. The transition may take time and the result may not come overnight. But the Government needs to continue to develop the country and provide infrastructure and attends to the need of the people. Hence, the GST has been able to sustain the country whilst it is in transition. Once we are have managed to transform the economic base to efficient-seeking activity and services economy, Malaysians will be able to see feel the effect of the changes.
At the same time, the Government cannot just rest at its laurel. The Government has to look at making the GST collection, refund and appeal system more efficient. Rest assured, once the GST system is more efficient and businesses and enterprise are able to collect the refund and to lodge appeal at a faster rate, people will be able to see the benefit of GST and will see the efficiency of the system.
As we know in Malaysia, there are many people who do not pay income taxes. Those who are earning below certain threshold are exempted from income taxes and only a small percentage of Malaysian actually pay this class of tax. Reliant on income tax alone will add to the stress of the Malaysia's financial management. What more with the depleting revenue from oil and gas sector and the volatility in the commodity prices.
The Government needs to diversify both the mode of raising income and the economy as a whole. The Government needs to have an efficient tax system to sustain the economy and spending level to support the development of the country whilst diversifying the economy. Malaysia needs to move from natural resources-based economy to the efficient-seeking economy. The transition may take time and the result may not come overnight. But the Government needs to continue to develop the country and provide infrastructure and attends to the need of the people. Hence, the GST has been able to sustain the country whilst it is in transition. Once we are have managed to transform the economic base to efficient-seeking activity and services economy, Malaysians will be able to see feel the effect of the changes.
At the same time, the Government cannot just rest at its laurel. The Government has to look at making the GST collection, refund and appeal system more efficient. Rest assured, once the GST system is more efficient and businesses and enterprise are able to collect the refund and to lodge appeal at a faster rate, people will be able to see the benefit of GST and will see the efficiency of the system.
