KUALA LUMPUR, March 15 — Government leaders defended today the decision to put off the implementation of the unpopular Goods and Services Tax (GST), and dismissed Pakatan Rakyat’s (PR) claims that the delay was a victory for the federal opposition.
The GST Bill was to be tabled at this month’s Parliament sitting, but was delayed amid mounting objections from the public as well as from segments of Umno.
A mass rally was supposed to have taken place today outside Parliament House as part of a
Home Minister Datuk Seri Hishammuddin Hussein (picture) laughed off claims by the opposition that the GST delay was a victory for them, arguing instead that that the postponement, meant to gauge public feedback, was accepted by voters.
“Well, they can say whatever they want. They can say it’s a victory but the reality is when the announcement was made, the move was well-received by many.
“So it’s their job to gain political mileage in anything that we do. It’s nothing new,” he told a press conference in Parliament today.
As Prime Minister Datuk Seri Najib Razak prepares to enter his second year at the helm of government, his administration has been hit by a number of apparent policy U-turns, the latest being the delay in the introduction of the controversial but unpopular GST.
The government was also forced to call off a complicated two-tier fuel subsidy system and last December it retracted an unpopular five per cent real property gains tax (RPGT), proposed in Budget 2010, for properties sold after five years.
Last Friday, Najib told his Umno party’s information chiefs to support his reforms, amid signs that some of his administration’s moves to free up the economy and reverse the budget deficit have been bogged down by a lack of public support.
Market analysts have also expressed disappointment with the government for putting off the GST.
Najib vowed last year to reform public finances in order to cut the budget deficit to 5.6 percent of the Gross Domestic Product (GDP) in 2010 from 7.4 percent in 2009 and pledged to tackle a subsidy regime that accounted for 15 percent of all federal government spending in 2009.
Savings from food and fuel subsidies amounted to RM3.6 billion this year alone under Najib’s budget plans announced in October last year.
A return to economic growth this year, seen at 5 per cent versus a 1.7 per cent contraction in 2009, has reduced pressure on the government to push through with reforms.
Despite initial zeal to rush the tabling of the GST bill during the March-April sitting, the government had decided to delay it after it conceded that it needed more feedback from all stakeholders.
The opposition, who have been campaigning against its implementation, has claimed “victory”.
PR leaders claimed the GST would only benefit businesses as consumers would be forced to pay the lion’s share.
Like Hishammuddin, Deputy International Trade Minister Datuk Mukhriz Mahathir also laughed off PR’s victory claim, saying the opposition often don’t “have anything good to say about what the government does.”
“When we are looking into details, then they say we are having second thoughts, but when we rush into things they say we’re doing it too fast,” he told reporters in Parliament.
“Which is it? It seems to me they don’t have anything good to say about what the government does,” said the deputy minister.
Mukhriz backed the delay by pointing out that the government could now get proper public feedback.
“I still feel that it’s (GST) one of the important methods that should be introduced by the government in terms of how to increase revenue,” he said.
The new tax system is expected to increase revenue by an extra RM1 billion from the existing estimates of RM12 billion garnered from the current sales tax scheme, according to Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.
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