Malaysia GST 4%

The plan is to implement a 4% goods & services tanx by 2011. Bad move, Malaysia. You should have announced that the plan is for 7% GST (like how the current GST rate is in Singapore).

And then, you should let the news sinking in to the hearts & minds of Malaysians. They will be angry. They will voice their displeasure. And then only, you announce that you are willing to lower the GST rate to be 4%.

People will be appeased. You too achieve your initial plan of the 4% GST. If only that simple!! Heh.

Malaysia's government plans to impose a 4 per cent goods and services tax by 2011 to boost revenue by an additional 1 billion ringgit (S$407 million) annually, a senior official on Thursday.

Second Finance Minister Ahmad Husni Hanadzlah said the new tax was crucial to the country's economic well-being and would replace the current narrowly applied 10 per cent sales tax and five per cent services tax.

The GST is a broad-based consumption tax levied on transactions at all stages of production of goods and services, while Malaysia?s current sales and services taxes are single-stage taxes applicable to selected goods and services.

The change to its tax regime comes as the government seeks to cut its budget deficit, which is expected to surge to 7.4 per cent of gross domestic product this year, as well as reduce reliance on income from state oil company Petronas which contributes 40 per cent of its revenue.

'The revenue source must be sustainable. If we can get sustainable revenues, we can get a good budget,' Ahmad Husni was quoted as saying by national Bernama news agency. However, he said essential goods such as rice, sugar, cooking oil and flour as well as domestic transportation would be exempted from the GST to ensure it would not burden the poor.

The bill on the sales tax will be tabled in Parliament for its first reading next month and is expected to be passed by March and to be implemented 18 months after that, he said.

From Straits Times, "M'sia to impose GST in 2011".

Malaysia plans to introduce a 4.0 percent goods and services tax (GST) in 2011, replacing current sales and services tax in a bid to diversify national revenues, a minister said Thursday.

The government had previously proposed to introduce a GST from the beginning of 2007 but the plan was deferred due to widespread opposition.

"We are replacing the current sales and services tax, which is currently between five and 10 percent," Second Finance Minister Husni Ahmad Hanadzlah said according to state news agency Bernama.

He said the tax legislation will be submitted in parliament in the current session which ends mid-December. A second reading will be in March next year and implementation would take place 18 months later, he said.

The government has said the changes would provide a more comprehensive, transparent and simple tax model.

"The revenue source must be sustainable. If we can secure a sustainable revenue, we can get a good budget," he said.

Husni said the government was expected to earn 1.0 billion ringgit (294 million dollars) in the first year of the GST implementation.

The GST would replace the existing taxes on sales and services and would not put pressure on prices, he said, adding that to ease the burden on consumers, staple foods such as rice, sugar, cooking oil and flour will be exempted.

The plan drew immediate criticism from opposition lawmakers who said it will cause living costs to spike.

Charles Santiago from the Democratic Action Party (DAP) which is a member of the Pakatan Rakyat opposition alliance said the government needed to release more details about the shake-up.

"There is a sense of caution because it could have an impact on the lower and middle classes, particularly in food, health care and clothing," he told AFP.

Opposition legislator D. Jeyakumar from the Socialist Party warned that "the GST percentage will start low but will increase over the years."

"It is definitely a bad move. The government is attempting to shift the taxes from the rich to the ordinary people," he said.

From Channel NewsAsia, "Malaysia plans 4.0% pct GST in 2011".

Tax will not burden poor or middle class, says PM Najib.

The Goods and Services Tax (GST) Bill will be tabled for first reading by the end of the current parliamentary sitting on Dec 17 to stimulate discussion on the tax among Malaysians.

Prime Minister Datuk Seri Najib Razak said the cabinet, at its meeting last week, agreed on the timing of the tabling of the bill.

The possibility of the GST being introduced was mentioned at the tabling of the 2010 Budget.

The GST will allow for the widening of the tax base and increase revenue collection in an era of a lower tax regime.

The GST will mean a more efficient collection mechanism of getting at those who slipped through the taxation net by taxing some of their spending.

Currently, Malaysia employs the sales and service taxes for some consumption.

“(If implemented) the GST would not be a burden to the poor or middle class or lead to inflation,” Najib told Malaysian reporters here on Monday.

If introduced, the GST would be less than the current sales and service taxes of between five and 10 per cent, he added.

As part of a more efficient economic management system, it would help narrow the nation’s current budget deficit, something to which the government is committed to.

Najib said international investors whom he met on Monday saw this as a sign of fiscal responsibility, especially with the planned reduction of the deficit.

The only countries in the region not employing the GST are Malaysia, Brunei and Myanmar.

From New Straits Times, "GST Bill to be tabled by Dec 17".

Update on 13/10: Malaysia is to postpone GST implementation. Yay! The grumbling voice of the citizens are too loud to ignore, huh?

THE Malaysian government on Wednesday said it would again delay the implementation of a controversial goods and services tax due next year in the face of strong public opposition.

'The government would like to announce the postponement of the implementation of the Goods and Services Tax (GST),' the finance ministry said in a statement.

The announcement, the latest in a series of delays in the scheme originally mooted in 2007, came ahead of the annual budget announcement on Friday by Prime Minister Najib Razak, who is also finance minister.

Veteran opposition lawmaker Lim Kit Siang said the government's decision to delay the GST could mean it is preparing for elections next year.

'The opposition has organised a national campaign against GST. There is no justification for GST at a time when there is abuse and corruption,' he told AFP.

'The government knows that if it goes ahead with the GST, public displeasure will boomerang through the air and whip the people who introduce it.' The GST would have helped Malaysia broaden its tax base away from the oil revenues which it currently depends on.

From Straits Times, "M'sia to postpone GST".


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