GST will oppress the poor, says MP

by Suganya Lingan

KUALA LUMPUR: Kuala Selangor MP Dr Dzulkefly Ahmad (picture) says the impending Goods and Services Tax (GST) is regressive when it is imposed across the board and will make the poor suffer.

Since everyone would be paying the same rates, the tax would actually penalise the lower-income groups in both urban and rural areas, he told FMT.

To make matters worse, he added, the tax would bring inflation with it.

“When the GST is imposed soon, the inflationary pressure will surely affect the poorer sections of society even if it is only temporary,” he said.

“The GST may perhaps be more appropriate when we are able to increase the income of the lower income groups and move our economy to a higher income economy.”

The Federation of Malaysian Consumers Associations (Fomca ) has suggested that the GST be phased in at a lower rate than the four percent that the Najib administration has proposed. Fomca Secretary-General Muhammad Sha’ani Abdullah told recently that a gradual implementation beginning at one or two percent would help cushion inflationary effects while educating traders and consumers on the benefits of the tax.

The government proposes to introduce the tax some time next year and expects to collect RM1 billion in the first year.

Dzulkefly said the figure was too conservative, noting that the government was already earning RM11 billion from current sales and services taxes.

“I believe the GST will bring in much more; otherwise, what’s the point in converting to GST?” Zulkefly said.

He described the proposed GST rate of four percent as “unreasonable and excessive.”

“A selective imposition of a tax on luxury items, which is of tertiary need, may be fairer to the poorer section of society,” he said.

He said the government would do better plugging leaks in its delivery systems and stamping out corruption. Quoting from the 2008 Auditor-General’s Report, he said these efforts would add RM28 billion to the government coffers.

And by avoiding “flip flop decisions,” especially with regard to mega projects, the government would save tens of millions of tax payers’ money, making it unnecessary to introduce “regressive measures” like the GST, he added.