There is growing concern that the goods and services tax (GST) bill, which will be tabled in Parliament on Dec 15, will add more burden to the people.

Pakatan Rakyat, which is opposed to the idea, has set up a task force to study the bill and garner feedback from the people.

The reasons for the objection include:

  • 85 percent of Malaysia's working population do not earn enough to pay tax under the current tax system. With the implementation of GST, they will have to pay tax.
  • GST only benefits the rich minority as it shifts the burden of tax to the ordinary people.
  • GST may result in a one-off inflation and chaos in the market if not implemented well.

dap 2010 budget rocket cafe 071009 tony pua 01 Raising his concerns during a press conference earlier this week, DAP parliamentarian Tony Pua ( right ) said Malaysia must first achieve the "high income" status before imposing GST.

This is because, out of the 12 million working population, only 1.8 million or 15 percent who pay income tax. It means that the income rate is too low for the remaining 85 percent.

"However, with the implementation of GST, every single one of them whether they earn RM500 a month or RM1,500 a month or even RM2,500 a month, will be forced to bear the burden," added Pua, who read Politics, Philosophy and Economics in Oxford.

Echoing a similar view, a blogger, who uses the pseudonym 'Simon Templar', explained that GST is only an alternative tax collection method for the current tax system.

"It ensures a more efficient collection of taxes by the government by having (the business sector) collect taxes from their customers on behalf of the government," he said.

He suggested that the government should reduce the rate of personal income tax to compensate for the GST.

'Good for big businesses, good for all'

On the left, Parti Sosialis Malaysia (PSM) MP Dr D Jeyakumar argued that the institution of GST is a 'blatant attempt' to reduce the tax burden of the rich and shift it onto the shoulders of the layperson.

"Corporate tax has dropped from 40 percent in 1988 to its current 28 percent. With the GST kicking in, we can expect corporate tax to decline further," he said in a statement.

While disappointed with the move, PSM is however not surprised as the BN government's fascination with GST is testimony to its belief "what is good for big business is good for all Malaysian".

hindraf crc scah talk 121208 jeyakumar "This neo-liberal dogma asserts that a country's economic growth is predicated upon the growth and profitability of big business, and that wealth will trickle down to the poorer strata," said Jeyakumar ( left ).

"The fact that the poorer 70 percent of mankind have become even poorer under the regime of structural adjustments (euphemism for withdrawal of subsidised social services) and privatisation, does not shake the confidence of the neo-libs."

Meanwhile, Pua told Malaysiakini that the implementation of GST may cause a one-off inflation.

This is because some businessmen may take the opportunity to increase the market price and the government should strengthen the enforcement to curb it, he said.

"Besides this, some items and services which are not chargeable under the old sales and services tax, may be chargeable under the new GST," he added.

Some consumers may expect the price to soar and therefore store the items first. This may cause chaos in the market as what happened in Australia a few years ago.