DAP MP wants PH to gauge public sentiment before reviving GST

With BN pushing for a GST revival after GE16, Ngeh Koo Ham says PH’s decision to support or oppose the tax can only be made after the public is consulted.

Last Sunday, Barisan Nasional pledged to push for the reinstatement of the goods and services tax after GE16. The GST was scrapped after Pakatan Harapan took power in May 2018.

PETALING JAYA:

 Pakatan Harapan (PH) must first conduct a study to gauge Malaysian sentiment on the goods and services tax (GST) before deciding whether to support or oppose its revival after the 16th general election (GE16), an MP said.

DAP’s Ngeh Koo Ham acknowledged the benefits of the broader-based consumption tax, as highlighted by experts but cautioned that PH must also weigh its drawbacks, particularly the potential impact on inflation.

“For me, we must study the sentiments of the people. Not many people understand taxes and how the funds are channelled back to them.

“If our study finds that we’ve reached a stage where Malaysians have that level of understanding where they don’t mind paying more taxes, then I think we can go for GST,” the Beruas MP told FMT.

Ngeh Koo Ham.

He was commenting on Barisan Nasional’s (BN) pledged last Sunday to push for the return of GST after GE16.

The tax scheme was introduced by the Najib Razak administration in 2015, with a rate of 6%, and zero-rated in June 2018, one month after PH defeated BN in the 14th general election (GE14) to take over Putrajaya.

Scrapping GST was among PH’s key pledges in the run-up to GE14.

However, with BN and PH widely expected to maintain their present partnership in GE16, reaching a consensus on the issue will be unavoidable.

Ngeh said he was fundamentally opposed to reviving the GST in the near future, warning that it could drive up the prices of goods and services through a cascading effect.

He acknowledged experts’ views that the GST represented a more efficient and equitable tax regime than the sales and service tax (SST), noting that it could curb tax evasion and significantly boost government revenue by covering a wider range of goods and services.

However, he said this meant that Malaysians would have to pay more taxes.

He also pointed to the problem of delayed refunds experienced during the GST’s initial implementation, attributing it to inefficiencies within government departments in the processing of claims.

“If the people overall think the GST is good as it will mean the government will have more funds to spend on other purposes and programmes for them, then I will support what the people want,” the DAP national treasurer said.

Charles Santiago, on the other hand, opposes the return of GST, expressing fears that it would adversely impact and impoverish Malaysia’s middle class, described by a February World Bank report as “immobile” in the area of upward social mobility.

Charles Santiago.

“The working class is already poor while the middle class is also having problems. The latter are the ones who will be more heavily affected by GST if it is revived,” the former Klang MP said.

“You’re looking at a society where revenue stagnation has become a major problem, so you’re going to attack the very people who are suffering. The rich are getting richer, the poor are getting poorer.”

Santiago said Putrajaya should instead introduce a wealth tax, rising gradually from a low starting rate of 1%, with the collections channelled back to the low- and middle-income.

The DAP man said the sum paid under the proposed wealth tax would be “small change” for affluent Malaysians, but could make a significant difference when redistributed among those in the lower-income groups.

Rebuffing GST inflation claim

Economist Yeah Kim Leng contradicted Ngeh’s warning of an inflation, saying there was no one-off surge when the GST was introduced in April 2015, with the consumer price index (CPI) in fact dipping from 3.2% in 2014 to 2.1% in 2015 and 2016.

Yeah, of Sunway University, instead said the 2017 CPI surge to 3.7% was driven primarily by rising fuel prices rather than other factors.

Yeah Kim Leng.

“Concerns of a cascading effect and price surge can be managed with effective enforcement to prevent profiteering.

“Efforts to ensure adequate supply of goods and services through productivity improvements, capacity expansion and lower regulatory burden can be intensified to keep inflation at bay,” he said.

Yeah reiterated that the GST was “superior” than even the expanded SST given its broader tax base, multi-stage tax on value added, and in-built compliance as well as audit trails.

Reintroducing GST after GE16 would be an appropriate timeframe, he said, since changing tax systems required more than a year’s worth of advanced planning and preparation.

“While global uncertainties may increase public objection and potential risk to the economy, its implementation can still proceed either by setting a revenue-neutral rate or starting with a lower rate to lower the burden on consumers and businesses.

“The rate can be adjusted over time to reflect the prevailing economic conditions and fiscal needs, especially increased spending on social security and welfare, given the ageing population and rising expectations for a higher living standard and a better quality of life,” he said. - FMT