KUALA LUMPUR, May 5 — Most Malaysians do not fully understand how the Goods and Services Tax (GST) works but they oppose it out of fear that their tax money will be wasted on corruption and government inefficiency, analysts said.
Ibrahim Suffian, head of independent pollster Merdeka Centre, also said people generally will resist new taxes even though the consumption tax, to be rolled out next April, will mean the burden is spread out in a country where fewer than 10 per cent are currently taxed on their income.
“Furthermore, regular reporting on wastage such as disclosed by the Auditor-General’s Report makes people wonder if their tax money will be prudently spent,” Ibrahim told The Malay Mail Online today.
Merdeka Center’s survey released last week showed that 62 per cent of the 1,009 Malaysians polled last month were against the implementation of the GST.
The independent pollster also noted that comprehension of the GST was still low, with 53 per cent of respondents admitting that they did not understand how the consumption tax would work.
Despite Putrajaya’s RM17 million advertising blitz on the GST, Ibrahim said Malaysians were clueless about the consumption tax because it was still a relatively new idea.
“I think people will take it seriously as we get closer to the implementation date. Or rather, pay more serious attention to the ads and government info as we get closer to the start date,” said the analyst.
Dr Lim Teck Ghee, director of think tank Centre for Policy Initiatives, said public resistance towards the GST was mainly due to years of Putrajaya’s financial mismanagement.
“Why must the rakyat (and these include those well-educated and affluent, and not only the less educated and ignorant) be burdened with a new form of tax when the money which is collected is eventually misused by the government?” Lim told The Malay Mail Online in an email interview.
“This concern that the BN has been irresponsible (as well as corrupt) and will continue to be irresponsible, in making use of whatever funds it collects is the fuel behind the opposition,” the analyst added, referring to the ruling Barisan Nasional (BN) coalition.
He also stressed that opposition against the GST cut across political lines.
More than 15,000 people flooded the capital city on May Day to protest against the GST, one of the biggest rallies since the Bersih demonstration in 2012 for free and fair elections.
“If the GST is badly implemented and brings about a higher cost of living, or if our economic growth falters for whatever reason, or if there is another financial scandal, we can expect the anti-GST bandwagon to be sustained and to become a major factor in the political popularity stakes,” said Lim.
Professor Jayum Jawan from Universiti Putra Malaysia said Putrajaya needed to convince Malaysians that monies collected from the GST would be spent prudently.
“Of course people are worried about how taxes are being spent, what is it going to be spent on, is it going to be spent wisely?” Jayum told The Malay Mail Online.
The Auditor-General’s 2012 report released last year highlighted the wastage of public funds across government departments running into the millions, such as the loss of police equipment worth RM1.3 million, RM3 million spent on National Youth Day celebrations that included K-pop groups from South Korea, and the Department of Broadcasting’s vastly inflated purchase of clocks and scanners above cost price.
James Chin from Monash University’s Malaysian campus said Malaysians are against the GST because it is expected to increase the cost of living that is already going up.
“The government claims that in the Klang Valley, inflation is only at about 5 per cent, but you and I who live in KL know that the inflation rate is way more than that. It is at least 12 to 15 per cent,” Chin told The Malay Mail Online.
“The rich can afford the increase of one or two per cent but for the poor, they will not be able to afford it,” the political analyst added.
The GST is a consumption tax, meaning all Malaysians will be taxed according to their level of spending, regardless of income.
This differs from income tax that is only applicable after a certain salary bracket is exceeded.
Malaysia’s proposed GST rate of 6 per cent is the lowest in the region, as most countries implement a 10 per cent value added tax (VAT).
The tax was first announced during Budget 2005 and was originally scheduled to be implemented in 2007 before it was deferred due to fierce public opposition.
It was finally announced in Budget 2014 last year, a few months after the May 5 general election.
