kheru2006 (kheru2006) wrote,

The good, the bad and the ugly of tax

IN less than a year, the Goods and Services Tax (GST) will be a reality. Come April 1, 2015, Malaysia will join the ranks of some 160 countries in having this form of tax system.

In fact, some 90% of the world’s population already live in countries with GST or Value-Added Tax. In a sense, therefore, we are not venturing into new territory.

But any form of taxation, be it new or simply revised upwards, is bound to evoke an emotional response.

The anti-GST rally held on May 1 is indicative of such a response. While we should respect the right to peaceful assembly as a means to articulate one’s grievances, we also need to ask if those present fully understand how GST works, and how they will be personally impacted.

It is never easy to explain things in a rational manner when certain quarters play the populist card to the hilt. After all, they are not the ones who have to administer the painful medicine necessary to boost the country’s economic health.

The Malaysian population has just crossed 30 million but only about 5.6% or 1.7 million of the country’s population pay income tax. Figures from the Inland Revenue Board reveal that only one million Malaysian employees pay tax although there are four million employees with income tax files.

Similarly, of the 450,000 companies that have files in the IRB, only 75,000 companies are classified as eligible taxpayers.

This being tax season, we hear the usual lament about how those who are employed and taxed upfront pay more because they do not have tax consultants to help them minimise their tax liability. We have anecdotal evidence about the entrepreneur driving a luxury car who probably pays less tax than the senior manager he employs.

There may be creative ways to file one’s tax returns so as to fall out of the tax bracket but the GST will at least ensure that those who spend more on goods and services, based on their consumption patterns and habits, will contribute to our tax coffers.

And that include tax evaders, prosperous businessmen-hawkers who don’t pay income tax, and even the neighbourhood soya bean milk seller who is able to send his children overseas on his own expenses.

What is important, however, is to tell the ordinary person that he does not have to pay GST for a packet of nasi lemak or char koay teow. And that there will be some 3,000 exceptions or zero-rated products such as food items when the GST is implemented.

From what has been revealed so far, basic products including rice, sugar, salt, piped water supply, bus, train, health services and highway tolls will not be included in the list.

In short, if you live a simple lifestyle based on needs rather than wants, the GST is not going to hurt your pockets the way the political opportunists seem to suggest.

The government needs to do a better job communicating this message across to the masses. Putting up billboards, publishing the occasional articles, or having seminars and confe­rences will not help the ordinary people understand the issues.

Our politicians, whichever side of the divide, should work together to ensure that what is collected is well managed and spent, without the wastage and leakages that are regularly revealed by the Auditor-General.

When it comes to the economy, we need to be in one accord to steer the Malaysian economy out of choppy waters. The STAR Opinion Columnist 04 May 2014

Tags: gst

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