Gov't punishing Malaysians with new tax, says Anwar

BUDGET 2014 The introduction of the good and services tax (GST), as just recently announced by Prime Minister Najib Abdul Razak as part of the 2014 Budget only serves to “punish the people”, said Anwar Ibrahim.

In an immediate reaction to the budget, the opposition leader (left) said this will only further serve to widen the divide between the rich and the poor and vowed that Pakatan Rakyat will continue to oppose the GST in earnest.

However, he said the budget further lacked focus “fundamental issues and good governance”.

“There was feeble argument on reducing sugar subsidy. There is no focus on the issue of good governance. 

“(There was) Lower taxes for the rich, special funds for companies (but) at the same time you impose general tax that will affect a large segment of the population. It is a paradox,” he said

Najib today announced that the Sales and Service Tax will be abolished, and in its place will be the much-critised GST at 6 percent, effective from April 1, 2015.

Below is what others have to say about Budget 2014:

Deputy Prime Minister Muhyiddin Yassin

GST is not an additional tax, but a replacement to the sales and services tax which has been around for a long time. 

Malaysia's rating will continue being at a good level and this will then give confidence to the international society including investors. We will see a sustaining economy as a long term result, the government will handle the economy better and finally there will be more benefits for the people.

Many written reports had been done on why GST must be implemented. The PM has given an extraordinary explanation on the matter, so much so the opposition were speechless, they couldn't stand up and oppose. They also know that in the end, we have to implement GST.

Serdang MP Ong Kian Ming:

I know why Najib thinks things will be cheaper with the GST. I don't agree with him. He says people will be able to spend less because the sales tax and service tax (SST) will be abolished (10 plus 6 percent). 

SST is for small percentage of items. GST is across the board. Companies will take this opportunity to increase their prices by at least 4 percent. In fact, I expect prices to increase in anticipation.

Kluang MP Liew Chin Tong:

There is potential the GST will result in recession. It will reduce domestic consumption. You are raising revenue from the poor. Once their disposable income is reduced, their spending power will reduce.

Much of our economy is dependent on domestic consumption. GST will reduce demand, people will think about what to pay. We are basically taxing people who never paid taxes. 

There is no major rethinking about public transport. If you want to reduce subsidies, you must have efficient public transport system. Six percent for the GST is too high. We were expecting four percent.

Former Malacca chief minister Mohd Ali Rustam:

The BN government did it right by introducing GST to replace SST. The poor benefits more.

Kuala Selangor MP Dzulkefly Ahmad:

GST will supposedly avoid double taxation, Najib is lying to the rakyat. If it is less tax how is it possible to get more tax revenue, Najib? Please sir.

PKR vice-president Chua Jui Meng:

BN breaks general election manifesto of easing cost of living by introducing an alarming six percent GST instead of proposed 4 percent. Malaysians made to pay government's debt.

Selangor Menteri Besar and Bandar Tun Razak MP Abdul Khalid Ibrahim:

One thing is very clear, that is the continuous increase of operational expenditure (opex). They need to establish  a commission or taskforce to analyse how to reduce expenditure and bureaucracy.

Siz percent, basically, is based on the experience of some countries which is very low because the cost of administration is between 5 percent and 10 percdnt from what can be earned from GST.

It's just a Catch-22 situation. I believe that the government will later increase the GST rate because 6 percent is not going to get a lot of additional income.

Ayer Hitam MP Wee Ka Siong:

First and foremost the Real Property Gains Tax (RPGT) will have a big impact on housing developments. It cannot be done in the short period. Many Chinese are involve in property development. 

It must be done in a staggered manner. I know the intention is good,  but you do in a drastic manner and it might setback property sales. A total of 150 industries are involved here.

National-type secondary schools must also be must be given some allocation. I think the GST is okay. People are asking why we need GST? With questions answered, the people will understand why we need GST. I hope there is no double taxation.

Immediate past president of Real Estate and Housing Developers’ Association (Rehda) Ng Seing Liong:

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

Raising the minimum purchase price for foreigners 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.

Malaysian Institute of Estate Agents (MIEA) president Siva Shanker:
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.

AWC Bhd CEO Ahmad Kabeer Nagoor:

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), I feel. Certain aspects, such as the sugar subsidy (being removed) may not be popular, but (nevertheless) have to be done away with.

SapuraKencana Petroleum Bhd chief executive Shahril Shamsuddin:
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.

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

[More to follow]