There
are a lot of feedback on Malaysian proposed implementation of the
Goods and Services tax (GST) recently. There are various of arguments
from different people that arguments for or against the GST.
Arguments
For: advantages
(government, business, consumers)
According
to the government's, there are a lot of benefits and reasons to
implement the GST which is good for the development of the country.
Even though many people is worrying the implementation of the GST is
increasing the burden for citizen, in fact will not hurt the citizen.
This is because the proposed implementation of GST is the replace the
existing sales and service tax which has the higher rate compare to
the GST. Generally, there are two types of sales and services tax;
10% of tax and 6% of tax which amounted to 16% overall. Therefore,
government is saying that the implementation of GST would not hurt
the people as the GST rate is much more lower compare to the existing
sales and services tax.
Besides,
the implementation of GST did not burden the businesses even the GST
is imposed at every level of the supply chain. The tax elements would
not become the part of production costs as the GST paid on the inputs
by the businesses is claimable. Hence, the cost of production of the
businesses would not be affected as the input tax incurred at the
previous stage is always be deducted by the businesses in the next
step of supply chain, so it does not matter how many stages where a
particular goods and services go through the supply chain. Moreover,
the burden of taxpayer would not increase with the proposed
implementation of GST as the income tax rate is not increasing thus
tax burden of citizen will not increase when income level increased.
The
introduction of the GST is proven to be better tax system as to
enhance the effectiveness and efficiency of the existing taxation
system in order to eliminate the existing Sales and Services tax
(SST) inherent weaknesses such as compounding effects, transfer
pricing and value shifting. This is because the GST will be
administrated in a fully computerized environment, therefore speeding
up the information delivery such as refund claims. In addition, GST
could provide fairness and equality as the taxed are levied fairly on
the businesses involved such as wholesaling, manufacturing, service
sectors or retailing and provide better transparency to consumers as
they will know exactly whether the goods or services they consume are
subject to tax and the amount they pay for, unlike the present sales
tax. Everyone is paying tax with the implementation of GST and the
tax burden is spread over, instead of just relying on the income tax
derived from the working population, thus GST could provide fairness
and equality to everyone. All these benefits provided by the
implementation of GST could stimulate the economic growth and
increase the competitiveness in the global market.
One
of the government's budget objectives is to reduce the fiscal deficit
by the implementation of the GST as the government revenue will be
increased from the collection of the GST. GST has advantages to
certain degree because the revenue increased is not just from local
people but from the foreigners too. The collection of the GST can
increase the revenue from the tourism industry as some revenue is
extracting directly from tourists where the tourists spend on goods
and services that made in Malaysia and overall government revenue
will be increased.
Moreover,
the standard of living to Malaysian consumers and businesses can be
improved as the government can have more fund to use for the country
development purposes in social infrastructure such as health
facilities and institutions, educations and public facilities due to
the increment of revenue from the collection of GST. Government can
provide for the needs of the public, better healthcare system and
provide welfare services for the underprivileged and vulnerable
communities with the increment of revenue from the collections of
GST. Therefore, the introduced of GST can improve the Malaysian
standard of living by the larger funding available to invest for
existing improvement and better future development.
Lastly,
some of them saying the proposed implementation of GST is good
because many countries which over 160 countries have adopted GST and
its implying the GST must be good for the country development.
Besides, the effectiveness and efficiency provided by the GST system
enable Malaysian to have better management of its finances and in
order to cited the success of other country such as Singapore,
Australia and New Zealand as benchmarks.
