Malaysiakini Letter

Penang CM's 'GST to states' suggestion is ill-conceived

Eric See-To  |  Published:  |  Modified:

LETTER | DAP secretary-general Lim Guan Eng wants Malaysia to follow the example of Australia and return part of GST collections to states.

In particular, he wants the federal government to give 50 percent (or 3 percent of the six percent tax) back to the states.

There is a danger in making simplistic statements such as this without considering other factors.

For example, Australia's GST is 10 percent versus six percent in Malaysia.

Australia's personal tax rate is also much higher. Australia starts taxing their residents when their salaries are just A$1,500 per month at a rate of 19 percent – versus zero percent for those whose income is RM4,000 per month or less in Malaysia.

Australia's personal tax rate goes up to 37 percent for their middle income citizens, versus 24 percent for Malaysia, while their highest earners are taxed at 45 percent versus 28 percent here.

While Australia's company taxes are 27.5 percent for SMEs, versus 17 percent in Malaysia, and 30 percent for larger companies, versus 24 percent in Malaysia.

Making populist and selective statements is easy, but the reality is a lot more complicated than that.

If Guan Eng was an opposition politician in Australia, he would probably be claiming that Australians are badly oppressed and struggling to survive while the country is going bankrupt, as Australia’s household debt to GDP ratio is 125 percent.

The DAP already says the same thing about Malaysia, by citing that Malaysia’s household debt to GDP is a “staggeringly high” 84 percent.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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