GST reintroduction needs to be carefully executed, says economist

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Baharom said GST is an important component of the economy but the government needed to be very careful in terms of executing the tax as well as identifying the goods and services that would be taxed. – Bernama photo

KUALA LUMPUR (Sept 13): The possibility of reintroducing goods and services tax (GST) will need to be carefully executed to ensure the people gain full benefit from the tax system, economists said.

Lead researcher (Centre of Excellence in Islamic Finance), INCEIF University, Prof Dr Baharom Abdul Hamid said the GST, which is a consumption-based tax, is an important component of the economy but the government needed to be very careful in terms of executing the tax as well as identifying the goods and services that would be taxed.

“In most countries, the moment they introduce the consumption-based tax, they will periodically reduce the income-based tax but that did not happen in Malaysia previously.

“While we want an additional tax via GST or via consumption base, we maintain the income progressive based tax so the people were not happy,” he said on BernamaTV’s special programme on the 12th Malaysia Plan (12MP) mid-term review on Tuesday.

Meanwhile, economist Prof Emeritus Dr Barjoyai Bardai said GST is a man-made tax that has some weaknesses as previously experienced by Malaysia during its four years of implementation.

“We realise that the main problem with the GST is the apparent burden which psychologically affects the consumer and we know that economics is a sign of behaviour.

“If the people are not happy about the tax system then they are not happy about the whole economy and the nation,” he added.

On Monday, Minister of Economy Rafizi Ramli said the government is open to reintroducing the GST as one of its strategies to widen the revenue base to achieve fiscal sustainability.

He said the current administration would be open and go through whatever way it can to achieve fiscal sustainability through a wider revenue base, whether it is going to be capital gains tax, GST or any other form of direct or indirect taxes. – Bernama