Anwar: Only 'towkays' want GST as it shifts tax burden to consumers

 

PARLIAMENT | Prime Minister Anwar Ibrahim claimed that only business owners and big businesses support the reimplementation of the goods and services tax (GST) because the system shifts the tax burden onto consumers.

Anwar said that this and cost-of-living pressures were among his concerns about GST reimplementation, even though the system can help curb black economy activities.

“If you look at the discussions, all the ‘towkays’ and big businesses want GST.

“To want GST, there must be a reason. It is easy for them; the tax is shifted. No need to impose it on them (businesses); impose (the tax) at the lower levels.

“That is my big problem,” he said.

'Issue of conscience'

Anwar, who is also finance minister, said the government needs to take into account monitoring and enforcement weaknesses before considering the taxation system.

For example, he said, traders can exploit enforcement weaknesses in the sales and service tax (SST) system and raise prices. However, Anwar said the government’s price control measures address this.

While Anwar acknowledged the GST’s advantages in price monitoring and transparency, as the tax is imposed at every stage of the supply chain, he said it affects consumers of various goods and services.

“When we explain, we say GST, then automatically everything gets taxed.

“A farmer in Pendang, even though directly we say sugar is not taxed, rice is not taxed, everything else is taxed.

“So, for me, this is also an issue of conscience,” he said.

Earlier, Awang said the GST has the potential to reduce black economy activities because tax is imposed comprehensively, from the production stage to the end consumer.

He also said that the SST has weaknesses because it is imposed at the initial stage on traders, thus opening room for price manipulation before goods reach consumers.

Firm 'no' to GST for now

Anwar said the government is ready to examine any proposals to reintroduce GST, but it maintains its stance that the tax is unsuitable for now.

He said the matter was also discussed during budget dialogues, with representatives of major associations and chambers of commerce voicing support for the implementation of the GST.

“I took time to explain; I said at this stage of taxation, do not burden the people with cost-of-living problems.

“That is why I appeal for them to understand why GST cannot be introduced now,” he said.

Malaysia introduced the GST at six percent on April 1, 2015, to replace the SST.

However, the GST was abolished on June 1, 2018, following a change of government after the 14th general election, before the SST was reintroduced on Sept 1 of the same year.

GST is a multi-stage consumption tax imposed along the supply chain, whereas SST imposes sales tax at specific stages and service tax on taxable services.

Debates over the reimplementation of the GST continue to draw attention following calls from several quarters who argue the system is more transparent, widens the tax base, and can reduce the shadow economy. - Mkini