Retailers are most afraid of GST, says BN MP

Retailers are the ones who are most afraid of the possible introduction of the goods and services tax (GST) as it would mean that they could no longer “manipulate the system”, a BN MP said today.

Pulai MP Nur Jazlan Mohamed said that the current sales and services tax (SST) gave retailers the leeway to manipulate for more profits.

However, having a GST would mean that the retailers would be paying the tax right from the distributors and manufacturers, before later collecting them from the customers. 

“With GST, they can’t escape, and they will have to pay and account for the taxes collected at all levels,” Nur Jazlan said while speaking to reporters in the Parliament building.

Earlier, the MCA said that GST can redistribute wealth from the rich to the poor, as the higher income group is expected to pay more GST.

This income, said MCA’s Labis MP Chua Tee Yong, can be used to fund targeted subsidies to help the lower income group.

"In Singapore, 75 percent of GST collected is paid by the top 25 percent income earners and expatriates," he told reporters today.

The GST is widely-speculated to be included in the 2014 Budget, which will be tabled tomorrow.

Speaking at the Parliament lobby, Chua (right) said that the lower income population can be shielded from the GST if essential items are exempted from the tax.

“It will mostly affect people who consume processed items,” he said.

When it was pointed out that most products at Kedai Rakyat 1Malaysia, targetted for the poor, are processed items, he said: “This is why certain items should be exempted and zero-rated, including healthcare and public transport.”

“GST as a whole is not totally bad. We have a shadow economy, where we cannot explain outflows, consisting transfer pricing, tax evasion etc.

“(The GST) will ensure better recording compliance and additional revenue for the government,” he said.

He also gave the same reasoning when asked if the GST would adversely affect the 80 percent of Malaysians who do not earn enough to pay income tax.

List of criteria before GST

Nevertheless, he said, the implementation should meet the following criteria, raised by the MCA its its sole meeting with the government on the matter in 2009:

• A transitional period for businesses and consumers, and a transparent list of which items are exempted or zero-rated;

• Exemption of essential goods including healthcare and public transport;

• Revenue generated from GST used to cushion subsidy rationalisation;

• Reduction of personal and corporate income tax;

• Removal of sale and service tax, and monitoring to ensure there is no profiteering by businesses who slap on GST without removing the previous tax portions;

• Subsidised compliance training for the small-medium enterprises; and

• Reasonable time frame for refund process for export based industry.

“The GST should also not be introduced at 7 percent, as previously mentioned to avoid teething problems.

“We should introduce at a lower rate and slowly adjust as it is not set in stone,” he said.