GST Boon or Bane For Malaysian Economy
GST – Boon or bane for the Malaysian economy?
Amirul Ruslan Finance Feb. 17, 2014, 9:00 AM
It’s been a whirlwind year of Malaysian price and tax increases. Right at the centre is the controversial Goods and Services Tax at a flat 6%, revealed in the 2014 Budget announcement by Prime Minister Datuk Seri Najib Razak. We look at the facts of the GST and how it will impact the economy.
PRO: A replacement tax, not an additional tax
In all the arguing and debating about the GST, it’s worth noting that the GST replaces present consumption taxes – namely the SST, or sales tax (10%) and the service tax (6%). In theory, a flat 6% GST means consumers will be charged less, since they’re not paying 10% + 6%.
PRO: Better for businesses
Economists prefer the GST over SST because it is more transparent and more business friendly. With the government hailing the ease of administering GST – including simplified tax returns – preparing for April 1, 2015 will not be as difficult for local firms as economists earlier worried.
CON: A year of price increases, new taxes, and subsidy cuts
This year Malaysians have had to contend with petrol subsidy cuts, the abolishment of the sugar subsidy, public transport price increases, likely toll hike and the GST. The average Malaysian is hurting from all the increases, meaning come 2015 the GST will start on a bad foot, regardless of how it’s marketed to the public. Ideally, the GST would have been announced this year and the rest of the price hikes would be staggered over the next five years.
CON: Expect a jump in inflation
Other countries introducing a GST have had to deal with a sudden sharp jump in inflation. There’s no reason to indicate the same will not apply for Malaysia, which already has to deal with serious inflation. An estimated 2-3% higher inflation rate can be expected.
Conclusion: Not in love with the tax, but can it be the cure Malaysia needs?
Putrajaya wants all of Malaysia to know that some sacrifices have to take
Amirul Ruslan Finance Feb. 17, 2014, 9:00 AM
It’s been a whirlwind year of Malaysian price and tax increases. Right at the centre is the controversial Goods and Services Tax at a flat 6%, revealed in the 2014 Budget announcement by Prime Minister Datuk Seri Najib Razak. We look at the facts of the GST and how it will impact the economy.
PRO: A replacement tax, not an additional tax
In all the arguing and debating about the GST, it’s worth noting that the GST replaces present consumption taxes – namely the SST, or sales tax (10%) and the service tax (6%). In theory, a flat 6% GST means consumers will be charged less, since they’re not paying 10% + 6%.
PRO: Better for businesses
Economists prefer the GST over SST because it is more transparent and more business friendly. With the government hailing the ease of administering GST – including simplified tax returns – preparing for April 1, 2015 will not be as difficult for local firms as economists earlier worried.
CON: A year of price increases, new taxes, and subsidy cuts
This year Malaysians have had to contend with petrol subsidy cuts, the abolishment of the sugar subsidy, public transport price increases, likely toll hike and the GST. The average Malaysian is hurting from all the increases, meaning come 2015 the GST will start on a bad foot, regardless of how it’s marketed to the public. Ideally, the GST would have been announced this year and the rest of the price hikes would be staggered over the next five years.
CON: Expect a jump in inflation
Other countries introducing a GST have had to deal with a sudden sharp jump in inflation. There’s no reason to indicate the same will not apply for Malaysia, which already has to deal with serious inflation. An estimated 2-3% higher inflation rate can be expected.
Conclusion: Not in love with the tax, but can it be the cure Malaysia needs?
Putrajaya wants all of Malaysia to know that some sacrifices have to take