Hard for Pakatan to abolish GST, says economist

Sheridan Mahavera Sheridan Mahavera Updated 8 years ago · Published on 16 Mar 2018 5:45PM · 4 Comments

Pakatan leaders during the launch of the opposition coalition's manifesto for the 14th general election. An economist has said that abolishing the GST, a key promise of Pakatan's manifesto, will be difficult to achieve. – The Malaysian Insight pic by Hasnoor Hussain, March 16, 2018.

PAKATAN Harapan must have alternative revenue sources to plug the shortfall from abolishing the goods and services tax (GST) – a core proposal of its election manifesto – an economist said today. 

Prof Yeah Kim Leng of Sunway University said a PH government will be hard pressed to find another source of income as the  GST contributed RM42 billion to the national coffers in 2017, against the sales and services tax system (SST) which collected about RM20 billion. 

“You can still try to find alternative sources of income such as reducing government expenditure through cutting on wastage,” Yeah told a seminar on the 14th Malaysian general election at the ISEAS-Yusof Ishak Institute in Singapore.

“But what is more important is that the GST is an efficient, broad-based tax system. Whereas the SST is only meant for some consumers and for producers. It is less efficient.” 

In its election manifesto, PH, which is campaigning against the ruling Barisan Nasional coalition, has promised to bring down the GST rate to 0% within the first 100 days of its administration.

The proposal has been criticised by members of the Najib administration who said it would deplete a necessary source of income.

PH, however, claimed that the GST has pushed up inflation and hurt low income Malaysians the most.

To make up for the shortfall in revenue, PH plans to bring back the SST, the consumption tax that existed prior to the introduction of the GST in 2015.

According to PH’s calculations, it plans to cut down on wastage and corruption in government spending, which it claims costs the country RM20 billion in lost funds every year.

In PH’s 2018 alternative budget, which formed the basis of its economic manifesto, the coalition said the new SST would contribute RM16.5 billion to public coffers.

This would bring down the loss from GST elimination to RM25.50 billion from RM42 billion, according to Wong Chen, one of the economic manifesto’s writers.

Reinjecting RM25.5 billion into the market will cause a boom in consumption and business activity that will further increase revenue for the government, Wong had said.

Yeah of Sunway University said a better alternative from totally abolishing GST would be to bring the rate down to 4% and to continue targeted subsidies for low income groups. – March 16, 2018.

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Comments

  • Its definitely electioning and populist - BUT too many in this country want simple answers and sensationalism works on them. UMNO/BN is the govt we have not only because the leaders are scoundrels BUT it reflects the people's weakness too. The right answer is actually to lower the GST rate to no more than 3% or lower. BUT "lowering GST" does not make good sound bites, speeches and get the simple minded voters going> If our voters were not so, is there anyway Najib and Rosmah would not be publicly lynched by now? Is there a way Hadi's PAS can keep this charade they are not lying politicians most of all rather than anything to do with religion?

    Posted 8 years ago by Bigjoe Lam · Reply

  • Whether doable or not, let's give them the benefit of the doubt. PH has a lot of brain power in their team, unlike BN. What this country need now is a clean, efficient and trustworthy government.

    Posted 8 years ago by Ong Taik Kheng · Reply

  • GST or no GST is not going to stop people to choose Pakatan as the next government. There are more important reasons such as a cleaner government, a smarter administration, a learned team of leaders for people to choose Pakatan

    Posted 8 years ago by Tanahair Ku · Reply

  • its doable.reintroduce service tax. make government spending be transparent. open tender.
    austerity for 3 years. dont have to abolish toll. let existing concessions lapse. no more extensions.
    liberalise the economy . open investment

    Posted 8 years ago by Satkunabalan Sabaratnam · Reply