The government should plug leakages and implement transparency measures in its spending if it is to implement the Goods and Services Tax (GST), said a think tank.

“Issues of leakages and a lack of transparency in public expenditure should be resolved more enthusiastically in order to build credibility in the eyes of the public regarding the government’s fiscal adjustment plans,” said Centre for Public Policy Studies (CPPS) director Ng Yeen Seen.

NONE In a statement today, Ng also called for the government to commit to laying out a five-year timeline when introducing the GST so that any increases in the future are planned and made known to the public.

"This commitment restricts the government from arbitrarily increasing or removing the GST to promote price stability," he said.

Ng said in their policy paper 'The Introduction of Goods and Services Tax in Malaysia: A Policy Analysis' the think thank, part of the Asian Strategy & Leadership Institute (Asli), recommended the new tax to be at 5 percent.

This rate would not burden the consumer, he said, as it is still lower than the existing sales and service tax rates that the government says will be abolished in lieu of GST.

He also expected with this rate that the GST would not need to be increased in the next five years.

The highly criticised GST is expected to be included in tomorrow's 2014 budget announcement despite widespread resistance.

While the government says it needs to increase national revenue through the tax, critics have noted that measures to solve key financial issues plaguing the BN administration are not addressed . 

'Ensure no profiteering'

Ng also stressed that policies to minimise irresponsible profiteering activities and to strengthen the government’s credibility in face of the new tax was necessary.

anti gst protest 231013 07 “The government should encourage establishment of local consumer associations to assist in gathering price fixing reports since local households are more sensitive to price changes," he suggested.

Among the other seven recommendations made in the paper are to enforce the display of the actual amount of GST payable on price tags, with a similar tag on GST-exempted items.

 

“CPPS agrees with the need to introduce the GST that the government should look at enhancing measures to be taken at fighting price manipulation and reinvesting revenue gains from GST to improve the quality of public services,” said Ng.