GST: Here it comes

"Only the rich shall be taxed..." Haven't we heard this phrase countless times before from any politician's rostrum. In reality, any wide-based tax of this sort (GST) hits the 'poor' harder than the 'rich'. Anyway, the classification of 'poverty' in Malaysia has been a subject of dispute and unrest due its methodology of classification. But if one really looks at the mechanism of GST, it is to tax those on the poorer income group and those who are not declaring their taxes; and also the regular tax payers. A wide-tax net means whack everyone la.

Income tax for 2010 is just being proposed for a 1% reduction man. Not enough to offset the 5-10% GST rise in goods and services.

GST Bill to be tabled by Dec 17
New Straits Times

Tax will not burden poor or middle class, says PM Najib.

THE Goods and Services Tax (GST) Bill will be tabled for first reading by the end of the current parliamentary sitting on Dec 17 to stimulate discussion on the tax among Malaysians.

Prime Minister Datuk Seri Najib Razak said the cabinet, at its meeting last week, agreed on the timing of the tabling of the bill.

The possibility of the GST being introduced was mentioned at the tabling of the 2010 Budget.

The GST will allow for the widening of the tax base and increase revenue collection in an era of a lower tax regime.

The GST will mean a more efficient collection mechanism of getting at those who slipped through the taxation net by taxing some of their spending.

Currently, Malaysia employs the sales and service taxes for some consumption.

“(If implemented) the GST would not be a burden to the poor or middle class or lead to inflation,” Najib told Malaysian reporters here on Monday.

If introduced, the GST would be less than the current sales and service taxes of between five and 10 per cent, he added.

As part of a more efficient economic management system, it would help narrow the nation’s current budget deficit, something to which the government is committed to.

Najib said international investors whom he met on Monday saw this as a sign of fiscal responsibility, especially with the planned reduction of the deficit.

The only countries in the region not employing the GST are Malaysia, Brunei and Myanmar.