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Instead of 'absurd' GST, auction APs
Malaysia Kini - January 21, 2010
The government should auction the more than 60,000 Approved Permits, normally given to cronies instead of implementing the 'absurd' goods and services tax, said DAP leader Tony Pua.
"They (the government) could get RM2.4 billion from this, about RM1.4 billion more than what they could get from the implementation of the GST tax," he added.
He pointed out that the government had not exhausted all possible avenues to generate revenue and there were many alternatives to the GST, with the auctioning of APs being one of them.
The Oxford-trained former corporate figure turned politician asserts that instead of creating a high income economy, the GST would only serve to widen the economic inequality.
Sharing his views at an anti-GST forum organised by Parti Sosialis Malaysia (PSM) in Kuala Lumpur last night, Pua warned that the GST was a regressive tax that would penalise the poor if the bill - to be tabled in March - was passed.
Other panelists were Malaysian Trade Union Congress (MTUC) vice-president A Balasubramaniam, Aliran exco member Subramaniam Pillay and PSM central committee member and Sungai Siput MP Dr Jeyakumar Devaraj.
GST will create 'reverse socialism'
Also dismissing the claim that the GST could create a high income economy, Subramaniam said its implementation would only create "reverse socialism, resulting in skyrocketing inflation."
He was also not convinced with the government's argument that a reduction in income tax would balance the negative effects of GST.
psm gst forum 210110 p subramaniam"This is just the beginning. We would see a gradual increase from the 4% GST tax that would be imposed in March," he added.
The proposed GST bill accorded the finance minister the power to increase the GST tax as he sees fit.
Meanwhile, Pua reasoned that only 15% of the total workforce in Malaysia was taxable, so a reduction in income tax would reward high income earners instead of helping low-income workers.
Both Pua and Subramaniam lamented the fact that people would be charged an additional 4% tax for each item they purchased, be it toothpaste or a car.
The panelists agreed that the proposed GST would benefit exporters who could save up to RM1.4 billion, as the tax on exported goods would be reduced from 10% to 4%.
The business sector was also expected to benefit from the GST tax as it would no longer pay some professional taxes.
However, under the concept of a value-added tax such as the GST, exporters and businesses would transfer the burden of the tax to consumers, resulting in a loss for medium and low income groups.
Not the right time for GST
Pua and Subramaniam stressed that the problem did not lie with the concept of a consumption tax.
Professing himself as a 'compassionate capitalist', Pua clarified that he was not saying that the GST should not be implemented forever.
"If one day Malaysia becomes a high income society, then implementing the GST makes sense," he said.
psm gst forum 210110 panelistsEchoing this, Subramaniam pointed out that theoretically, the GST had a "self-checking mechanism" since all consumers would have to pay the tax.
Pointing to Scandinavian countries, Subramaniam said effective implementation of GST led to social benefits in education, healthcare, transportation and child care.
Nonetheless, he questioned the Malaysian government's ability to put these welfare policies into practice, noting that only Kelantan, Penang and Selangor were able to balance their budgets so far.
"I am not totally opposed to GST as a principle," he said. "But the conditions for GST are a high income economy that has low economic disparity. At this point, we could postpone implementation of the GST for another 10 to 15 years."
Pua went a step further, declaring that Pakatan Rakyat would definitely scrap the proposed GST if they formed the federal government.
"Pakatan would reduce corruption, stop the sale of AP and begin a policy of open tenders. This would save us billions of ringgit, and not just one billion," he said, drawing applause from the audience.
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