KUALA LUMPUR, March 10 — Pakatan Harapan’s (PH) promise to scrap the Goods and Services Tax (GST) within 100 days of winning the 14th general elections (GE14) will result in extra costs, an economist has said.
Zakariah Abdul Rashid, the executive director of Malaysian Institute of Economic Research (MIER), reportedly said the GST is necessary to increase the government’s revenue and is a good income source if the tax is used prudently.
“If the implementation of the system is drastically abolished, it will be a very challenging situation for all.
“At the same time, it will cause a shock in the existing system and create additional expenses,” he was quoted saying by local daily New Straits Times (NST).
Meanwhile, MIER senior researcher Zulkiply Omar said this was not the right time to abolish GST, as policies to cut tax should only be implemented when the government intends to encourage consumer spending in a softening economy.
“But if the economy is in a good shape, it’s a bad idea.
“At the moment, we see the economy getting better, so it is not the time to get rid of taxes, including GST,” he was also quoted saying by NST.
In its election manifesto launched on Thursday, PH said it intends to replace the GST with a “fairer” Sales and Services Tax (SST).
The federal Opposition pact also promised a holistic review of the country’s tax system in order to lessen Malaysians’ burden, including a relook of the corporate tax rate and income tax on small businesses and freelancers and personal income tax.
The Barisan Nasional ruling coalition has since criticised the manifesto, with BN strategic communications director Datuk Seri Abdul Rahman Dahlan saying that the government had collected RM41 billion through GST as compared to the previous SST with collections of only RM17 billion.
Abdul Rahman reportedly questioned how PH would cover the deficit of over RM20 billion if it abolished the GST.
The GST was introduced at a rate of six per cent on April 1, 2015, replacing the previous SST tax regime.
