Malaysians still can't afford to pay GST, what more at 7% start rate - Wong Chen ticks off Idris Jala

UPDATED VIDEO INSERTED PETALING JAYA - Unlike in Singapore, the Malaysian government's plan to implement Goods and Services Tax is regressive as the majority of Malaysians already find it burdensome to make ends meet, and the only ones to benefit would be the corporate fat cats and business cronies of the political elite, an Opposition leader said on Monday.

Based on newly-elected Member of Parliament for Kelana Jaya Wong Chen's numbers, 88% of Malaysia's 28 million population do not pay tax as they fall below the taxable level.

Meanwhile, due to decades of pump-priming the economy with mega infrastructure projects - many of which have turned into white elephants - Malaysia's national debt is at an all-time high and even by official estimates nearly breaching the 55% ceiling imposed by law.

Analysts however believe the 55% level has already been breached as the government - in computing the figures - have not included the loans and debts of government-linked firms such as public utilities Tenaga and Telekom as well national car maker Proton, which the experts have said they should.

As such, the GST is seen as a lifeline for the BN government to alleviate the pressure on the growing fiscal deficit. But its proposal has met stiff resistance from a public already struggling with high costs of transportation and food.

'PKR notes that the BN government is facing a fiscal crisis of its own doing. PKR believes that the 3 main causes of this crisis are as follows: a weak tax base, profligate spending and unabated corruption," Wong Chen told a press conference on Monday.

"The PKR stand is that - show us that you are willing to cut corruption, what have you done to reduce mega projects and can you balance your books (fiscal position). If you do these and still can't balance your books, then you are entitled to consider introducing GST but start at a very low level and not at 7%. Don't give us the lip service, show us the savings, For example the MRT is good but does it have to cost RM60billion - seriously guys?"

Don't try to pass the bill for BN's excesses to the main on the street to pay

Wong Chen slammed the BN for allegedly trying to pick on the man on the street to pay off serious financial problems that it has brought onto itself and the nation.

"We understand the rationale for GST is to widen and improve the existing tax base. However, the current weak tax base is not a matter of tax evasion per se but a reflection of the poor household earnings of the majority of Malaysians. The majority of Malaysians simply do not have sufficient income to pay income tax," said Wong, who also heads the PKR investment bureau.

"The current problem of a weak tax base is about low pay and income security. Therefore the rationalse for BN's GST tax plan to widen the tax base is in fact flawed. Promising corporate and income tax cuts to offset GST will only help the rich. In other words, BN's GST plan is regressive in nature and will essentially see the poor end up paying more than the rich."

Why 7% - who can afford?

Wong took to task Prime Minister Najib Razak, who is also the Finance Minister, for trying to push through an "exorbitantly high" 7% GST rate. He pointed to the Singapore example that officials in the Malaysian Finance Ministry such as Minister in the PM's Office Idris Jala have been alluding to in the press as a model for Malaysians to follow.

"Lastly, Idris Jala cited the current Singapore GST rate iof 7% as a model for Malaysia. This is an alarming departure from the 4% rate that is being proposed by the Ministry of Finance," said Wong Chen.

"We wish to remind the Minister that when Singapore introduced GST in 1994, it was a low rate of 3% and the Singapore government kept it low for 9 years before allowing an increase to 4% in 2003. It only increased to 7% in 2007, 13 years after GST was introduced. If the Minister loves the Singapore model so much, will he commit to 3% with a 9-year no-hike moratorium?"

Malaysia Chronicle