Con­sider a sim­i­lar form of GST, but at lower rate

New Straits Times - - LETTERS - PA­TRICK TEH Ipoh, Perak

Dr Mara War­wick, the coun­try di­rec­tor of World Bank, the Philip­pines, had com­mended Malaysia’s qual­ity growth and its abil­ity to achieve a high-in­come econ­omy, the newly elected gov­ern­ment should re­main stead­fast in its aus­ter­ity mea­sures.

The jour­ney ahead to bring down the na­tional debt is not only tough, but also te­dious. As a cau­tious cit­i­zen, I have ex­pressed my sup­port on the im­ple­men­ta­tion of the Goods and Ser­vices Tax (GST) on many oc­ca­sions in the me­dia. GST is not only an ef­fec­tive tax regime, but also a trans­par­ent and fair sys­tem to col­lect rev­enue for the gov­ern­ment. The more a per­son con­sumes, the more he has to pay. Such sys­tem en­cour­ages fru­gal­ity, thus re­duc­ing wastage in an ef­fec­tive man­ner.

Since it is an elec­tion pledge to re­in­state the Sales and Ser­vices Tax (SST) and its im­ple­men­ta­tion will take ef­fect from Sept 1, with a two-month tax hol­i­day, the new gov­ern­ment has to tread care­fully. Al­though the gov­ern­ment should be able to cope with the short­fall of RM20 bil­lion in re­in­stat­ing SST over the next cou­ple of years, in the long run, the com­pounded short­fall will worsen the na­tional debt sit­u­a­tion.

The gov­ern­ment should con­sider a sim­i­lar form of GST, much like the United King­dom’s value added tax or VAT, with a lower tax im­po­si­tion of, say four per cent, in 2020.

We shouldn’t rely too much on crude oil al­though the prices are on the rise lately.

Crude oil is a de­plet­ing nat­u­ral re­source and its prices are just too volatile to de­pend on as a re­li­able source of in­come to run a coun­try ef­fi­ciently.

With other sub­si­dies to roll out in com­pli­ance with the elec­tion man­i­festo in the com­ing weeks, the new gov­ern­ment has to find ways and means to man­age the econ­omy more ef­fi­ciently and to re­duce the coun­try’s bud­get deficit.

May 9 was a his­toric day for many Malaysians. The eu­pho­ria has not sub­sided, but it should not be al­lowed to lull us into com­pla­cency, ei­ther.

REUTERS PIC

The new gov­ern­ment has to find ways to man­age the econ­omy more ef­fi­ciently and to re­duce bud­get deficit.

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