January 31, 2010

KOTA KINABALU: The government needs to undertake aggressive and effective national roadshows to educate the populace about the Goods and Service Tax (GST) immediately.

Gerakan vice-president Datuk Mah Siew Keong, in making the call yesterday, said it is crucial for the people to understand the GST before the government implements it.

In order to convince and win over the people’s support for the introduction of GST, he reckoned that the government must ensure two things.

Firstly, putting in place a more simplified, efficient and transparent business-friendly tax collection mechanism; and secondly, stop revenue leakages and wastage by spending the GST collection on improving the public transportation, education and healthcare.

Mah, who is also the chairman of the party’s Central Bureau on Economic Development, proposed that the government give tax credits to eligible citizens to help them cope with the additional cost, if it wants to introduce the GST.

He said the government should also exempt essentials such as basic necessities which should include government-subsidised sugar, flour, petrol, cooking oil and other price-controlled items from tax.

“Like Canada, housing rental and medical services are another two items the government should consider for exemption for the good of the public,” he said in a statement.

The memorandum on the GST bill submitted by the party to Prime Minister-cum-Finance Minister Datuk Seri Najib Tun Razak recently contained the proposals.

Gerakan felt that, to ease the transition, it would be better to start off with 3 per cent GST instead of 4 per cent as proposed by the government.

Further, Gerakan also suggested that the government consider giving tax credits to help citizens cope with                   the additional costs like in Singapore.

While acknowledging the need for and rationale to introduce GST, Gerakan felt that the onus should be on the government to look into the timing of the GST’s official introduction.

“If the timing is not right, it could have serious repercussion on the economy.

For example, when GST was first introduced in Australia in 2000, people rushed to the supermarket to purchase goods they perceived to be more expensive after implementation.

As a result, discretionary decreased immediately after GST implementation to the point that the first fiscal quarter of 2001, the Australian economy recorded negative growth for the first time in more than 10 years,” he explained.

The GST is a consumption tax to be levied on transactions at all stages of production of goods and services but ultimately paid by the end consumers.

It is scheduled to come into force in July, 2011.

(Source: The Borneo Post)