PARLIAMENT The government is shelving the implementation of the Goods and Services Tax (GST) pending further studies on when will it be suitable for application in Malaysia and how to cushion any possible impact that may burden lower income groups.

husni eon bank function 120310 ahmad husni "We tabled for first reading in 2008, but we retracted the Bill after negotiations with multiple parties. We are focusing on improving the system to ensure that it would not burden the rakyat, that is the study we are conducting now," said Second Finance Minister Ahmad Husni Hanadzlah ( left ) during Question Time in the Dewan Rakyat today.

As of now, the Bill is still not included in the list of bills to be tabled before the House on the first sitting of the 13th Parliament, which met for the first time this week.

"Our studies in 2009 - based on the price of goods in that year - showed that it was not yet suitable to make a decision. We will study and announce our decision soon," he said while fielding a supplementary question from Ahmad Fauzi Zahari (BN-Setiawangsa), who had asked the original question on the same issue.

Best taxation system

Ahmad Husni explained that the reason GST is being considered is to take part in the rapid advancement in the 21st century, not only in technology and multimedia, but also in finance and taxation, as they look for best taxation system for the country.

He noted that 160 out of 196 countries in the United Nations have adopted this system.

Ahmad Husni added that mechanisms must be put in place to protect the lower income groups, like a zero-rate system for basic and essential goods, that will exempt them from tax.

He said that the government will conduct a thorough study of the tax rate under GST compared to the current sales and service tax and its impact on prices of goods before they even plan to impose the tax system.

Ahmad Husni said that the benefits of GST are clear as their simulation showed that in 2015, sales and service tax will amount to RM20 million.

But if GST is implemented, it would swell tax coffers by a further RM6 billion, and by another RM7 billion the next year.

He admitted that more promotion and education programmes may be needed for the rakyat to buy into the GST, as most now only have a negative perception of it.