6pct GST high, but better to bite bullet early

At 6 percent, the goods and services tax (GST) which will kick in on April 1, 2015, is introduced at a comparatively high level, a tax expert admits, but it is better to take the hit early on.

Similarly, a drastic removal of all the sugar subsidy starting today may taste better to some, but is something necessary.

Stakeholders weigh in on yesterday's Budget 2014 announcement:

SM Thannermalai, president of the Chartered Tax Institute of Malaysia (CTIM)

Although the 6 percent GST rate is slightly higher than the rate which is usually introduced at, by biting the bullet, we will not have to tinker with the system which will allow people to get used to the system. Plus at six percent, it is revenue positive.

The one I like is the personal tax, the prime minister increased the maximum level - remember that now you will pay 26 percent at RM100,000, it has now been increased to RM400,000.

He is also going to widen the bands as well, so people with a total income of less than RM4,000 not be taxed. Therefore that will be a whole group of people who will not be taxed when GST comes in.

(The government's) position by 2015/16 will be better in terms of revenue collection. With GST, it will have a steady flow of revenue - especially as it will be dependent on consumption, rather than profits of companies (which is where we now rely) and the state of the economy.

I think he has tabled a responsible budget, and he has not given away incentives all over the place - he has given small incentives across the economy but managed to be frugal and pragmatic.

Ratna Devi Nadarajan, vice-president, Federation of Malaysian Consumers Associations (Fomca)

Fomca has always urged that be given to the really needy and hardcore poor and so we agree with the PM's move to restructure subsidies.

The sugar subsidy cut is expected and we hope that it will address sugar consumption and boost the healthy lifestyle for the people... because in the end, the layman will benefit.

We hope that the government will channel the money saved from subsidy to healthcare sector and education about a healthy lifestyle.
Some traders may use it as an opportunity to increase price but it won't be much - only 34 sen more per kilogramme.

Mohd Nizam Mahshar, CEO, Majlis Tindakan Ekonomi Melayu

Everyone was hoping for 3-4 percent GST but we need to look at the overall model, what is to be taxed and what is not. As long as it doesn't touch the basic needs of the people, it's fair.

Seventeen months to implement also allows room to give comment and give feedback.

The Bantuan Rakyat 1Malaysia version 3.0 should be more targeted to help the poorest 10 percent, for example. We hope it will not be a political handout. The government needs a better mechanism and study more models.

It is a prudent budget. The government is spending on infrastructure projects like transportation, housing and security and telecommunications which are essentials.

Teh Kee Sin, president of the SMI Association of Malaysia

The RM120 million integrated package for SMEs to implement the minimum wage for all is not enough because we have over 600,000 SMEs. Even to buy machines so that we don't depend on labour for one company alone can come up to RM200,000.

The SME tax cut to implement GST is good but we hope that the government will give more rebates once GST is properly in place, but we expected the (GST) software to be given free (and not just subsidised). This is an additional burden.

The graduate entrepreneur fund is good as it will encourage graduates to start their own business, but we hope that there will be closer monitoring of the allocations so that the right people will benefit.

We are moving towards e-banking so we welcome the move to spend RM16 billion for faster Internet for all, but our concern is how much we will have to pay for the high speed Internet. As it is, we are paying more than other countries.

Ng Seing Liong, immediate past president of Real Estate and Housing Developers' Association (Rehda)

The Budget 2014 is not so good for the property industry as a whole. I don't think the Real Property Gains Tax (RPGT) increase will bring down house prices.

Raising the minimum purchase price for foreigners (to RM1 million) means they are only looking at Kuala Lumpur. What happens to places like Kuantan and Malacca, where the prices of properties have not reached RM1 million? How are the foreign purchasers going to buy properties there?

So, in essence, you are discouraging foreign investment into the country, contrary to what everyone else is doing, which is encouraging foreign investors to come in. Property is the one type of investment that cannot be taken out of the country.

We already know that the Developer Interest Bearing Scheme (DIBS) will be taken out of the picture because in the beginning such schemes are what increased house prices, I don't know why they were implemented in the first place, anyway.

Siva Shanker, president of the Malaysian Institute of Estate Agents (MIEA)

There were good steps in trying to cool the property market. But my fear is that it will create a knee-jerk reaction in the industry.

On RPGT, we should have thought of a way to differentiate from between the primary and secondary property market because the big speculation is in the primary market, no so much the secondary market.

Ahmad Kabeer Nagoor, CEO of AWC Bhd

Overall it seems balanced, though there is some apprehension with the GST. But it's already been implemented in many parts of the world, so it is inevitable (that it is implemented here). Certain aspects, such as the sugar subsidy (being removed) may not be popular, but (nevertheless) have to be done away with.

Shahril Shamsuddin, chief executive of SapuraKencana Petroleum Bhd

It's a prudent very budget, takes into consideration the need to reduce our budget deficit, and also takes into account the needs of the low income group.

While there may be some dissent, you can't deny that GST is an effective method of reducing the budget deficit.