GST comeback needs to be implemented in a targeted way - Customs

 

The reintroduction of the goods and services tax (GST) to replace the sales and services tax (SST) must be implemented in a targeted manner said the Royal Malaysian Customs Department director-general Subromaniam Tholasy.

So as not to burden the people who are facing rising inflation, he said the GST imposed at six percent previously should now be five percent for goods and seven percent for services.

“The government needs to look back at zero-tax items where this time it should only be limited to basic items,” he said.

He was speaking during a programme on Bernama TV today.

Subromaniam said a higher tax rate could increase the country’s income and finances, as well as boost the stock market.

“It will directly impact the strength of the ringgit against the US dollar,” he added.

He also said the re-implementation of the GST should take into account appropriate timing, the strength of the ringgit, and public policies by certain ministries, besides ensuring that inflation can be controlled.

“There is no denying that the previous implementation of GST in 2015 had several weaknesses such as subsidy reduction, rationalisation of electricity tariff rates, and the depreciation of the ringgit which caused the consumer price index to increase.

“The current consumer price index is rising but it does not translate into more revenue for the government because the impact of SST only reaches the import and manufacturing level for goods compared to the GST which impacts up to the retail level,” he said.

Subromaniam also suggested that the government not set the taxable threshold value too low so that small businesses will not be included in the implementation of GST.

The previous threshold for a business to be liable for GST was an annual sales figure of RM500,000 or more.

“Maybe we can see a threshold value that is more suitable with a rate of between RM1 million and RM2 million so as not to burden businesses like a regular grocery store,” he said.

He said the GST is a very efficient, transparent, fair, and business-friendly taxation system that can improve the country's economy and provide stronger competitiveness to the country’s exports.

“Therefore, GST will definitely stabilise the prices of goods in the long run,” he added.

- Bernama